- Key insight: Kevin Warsh was confirmed to the Fed board, filling a spot currently held by Stephen Miran.
- Forward look: Warsh's vote to lead the Fed as chairman is expected as early as Wednesday.
- What's at stake: Warsh, who has vowed to keep monetary policy independent at the central bank, faces both worsening inflation and a president who's pushing hard for lower interest rates.
WASHINGTON — The Senate voted to confirm Kevin Warsh to be on the Federal Reserve board.
He will replace a seat currently held by Stephen Miran, who was appointed to a temporary slot. Warsh, a former Wall Street banker and Fed board member, is also nominated to be Fed chairman, replacing Jerome Powell, whose term as chairman expires on Friday.
The upper chamber confirmed Warsh in a 51-45 vote. All Republicans voted in favor of his confirmation, and one Democratic lawmaker, Sen. John Fetterman of Pennsylvania, joined them.
Warsh's separate vote for Fed chairman is expected as early as Wednesday. Powell has said he will remain on the Fed board, setting up an
Warsh's nomination previously stalled in the Senate Banking Committee as Sen. Thom Tillis, R-N.C., vowed to oppose his nomination as long as a Department of Justice investigation into Powell continued. Both Tillis and Powell said that the investigation into Powell's comments in front of the Senate banking panel about the central bank's building renovation costs was unfounded.
Tillis voted in favor of Warsh as soon as the DOJ announced that it would drop its probe of Powell. As Fed chairman, Warsh is expected to scale back the Fed's role in markets by shrinking the Fed's balance sheet.
On independence, he'll face a tricky situation once he's sworn in. Inflation is worsening, particularly as the war with Iran drives up gas prices. Yet Warsh will face immense pressure from Trump to lower interest rates, and markets will be watching closely to see if Warsh acts independently.
In his Senate Banking Committee confirmation hearing, Warsh promised to uphold Fed independence on monetary policy.
"The President never, generally or specifically, instructed me [or] suggested I should commit to any interest rate path whatsoever," he said. "I will be an independent actor if confirmed as chair of the Federal Reserve."
He repeatedly said that the Fed needs to "stay in its lane" on political issues. He said in his opening statement, however, that the Fed is not politically independent on matters of bank policy.
