WASHINGTON (AP) — The Senate on Wednesday is set to confirm President Donald Trump’s nominee to lead the Federal Reserve, Kevin Warsh, bringing new leadership to the world's most powerful central bank at a fraught moment for the global economy.
Warsh’s confirmation was thrown into doubt in recent months after Republican Sen. Thom Tillis of North Carolina said he would block the nomination while the Justice Department investigated Fed Chair Jerome Powell.
The Powell probe was dropped in April, clearing the way for the Senate to confirm Warsh.
Warsh, 56, a former top Fed official, is becoming chair at an unusually difficult time for the independent agency.
Inflation has topped the Fed’s 2% target for five years and is now rising faster because of spiking gas prices. The Fed's interest rate-setting committee is divided and saw the most dissenting votes in more than three decades last month. And Powell, after years of personal attacks from the Republican president and an unprecedented legal investigation by the Justice Department, plans to stay on the Fed’s board even after his term as chair ends, potentially creating a competing power center.
The Senate is expected to vote on Warsh's confirmation on Wednesday afternoon, a day after approving his nomination to the Fed's Board of Governors. Pennsylvania Sen. John Fetterman was the lone Democrat to side with Republicans in confirming him to the board.
The Fed has faced numerous threats to its independence from Trump, who has repeatedly attacked Powell for not cutting interest rates. Trump also sought to fire Fed governor Lisa Cook and launched an investigation into brief Senate testimony by Powell on a building renovation.
Kevin Hassett, director of the White House’s National Economic Council, said in a Fox News interview on Sunday that he believes the markets are relieved that Warsh “is going to help lower interest rates over time.”
“Obviously, data driven. I’m not putting any pressure on Kevin Warsh,” Hassett said. “We know that he’s an extremely smart, competent person who could be very convincing when he talks to his colleagues.”
In December, Trump said on his social media platform that he wanted a Fed chair who would cut interest rates when the stock market rose — the opposite of what traditional economics would prescribe — and added, “Anyone that disagrees with me will never be the Fed chairman!”
Trump’s comments have fueled concerns over whether Warsh will set rates based on economic conditions or seek to cut rates to appease Trump, even if doing so could worsen inflation. At Warsh's confirmation hearing last month, Sen. Elizabeth Warren, a Democrat from Massachusetts, derided him as a “sock puppet” for Trump. Warsh declined to say that Democrat Joe Biden had won the 2020 election against Trump, who has falsely claimed that voter fraud cost him reelection.
Still, Warsh denied at the hearing that Trump had pressured him to reduce the Fed’s key rate.
“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said then. “Nor would I ever agree to do so if he had. ... I will be an independent actor if confirmed as chair of the Federal Reserve.”
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Associated Press writer Joey Cappelletti contributed to this report.
