Share to ClassroomSenate Confirms Kevin Warsh as New Fed Chair
The United States Senate has confirmed Kevin Warsh as the next chair of the Federal Reserve, the central bank that sets interest rates and shapes mortgages, business loans, and global financial markets. Wednesday's 54-to-45 vote fell largely along party lines. Warsh will replace Jerome Powell, whose term as chair ends on Friday. In an unusual move, Powell will not leave entirely; he will keep his seat on the governing board and his vote on the Federal Open Market Committee (FOMC) , which sets US interest rates. Warsh is a former Morgan Stanley executive and served as a Fed governor from 2006 to 2011.
President Donald Trump nominated Warsh after months of public clashes with Powell, whom he repeatedly accused of being incompetent for refusing to cut borrowing costs more aggressively. Confirmation was delayed when the Department of Justice opened a criminal investigation into the Fed, and Senator Thom Tillis blocked the committee vote in protest. He relented only after a US attorney agreed to drop the inquiry. During his hearing, Warsh said there was room to lower rates but vowed to make independent decisions, denying Senator Elizabeth Warren's claim that he would be Trump's sock puppet.
Warsh takes over during a difficult time. The Labor Department reported that the cost of living rose 3.8% over the past year, the biggest annual jump in nearly three years, with food, housing, and air-fare prices all climbing. Pressures have grown since the war with Iran disrupted tanker traffic through the Strait of Hormuz, pushing up crude oil and gasoline costs. At the FOMC's April meeting, three members signalled that their next move could be a rate increase rather than a cut. Warsh has called for reforms in how inflation is measured.
