Kevin Warsh, nominated by U.S. President Donald Trump to be the next Chair of the Federal Reserve, passed a key procedural vote in the Senate on Monday, moving closer to formal confirmation and a smooth transition of power from current Chair Jerome Powell, whose term expires this Friday. Following the so-called cloture vote held on Monday, the Senate is expected to hold a confirmation vote as early as Tuesday on Warsh's nomination for a 14-year term as a Federal Reserve Governor. Subsequently, senators will initiate the confirmation process for his concurrent four-year term as Fed Chair, with a vote on that nomination potentially taking place as early as Wednesday.
In a vote largely along party lines Monday evening, the Senate voted 49 to 44 to invoke cloture on Warsh's nomination to be a Federal Reserve Governor, clearing the way for a final confirmation vote. The only two Democratic senators to vote in favor of advancing the nomination were John Fetterman of Pennsylvania and Chris Coons of Delaware.
With the independence of the Federal Reserve under scrutiny, the Republican-controlled Senate is expected to approve Warsh as the central bank's next leader. Trump has undertaken a series of unprecedented actions to exert control over the Fed, including an attempt to remove Governor Lisa Cook—a case now before the Supreme Court—and his support for a Justice Department investigation into Powell's management of a building renovation project. A federal judge ruled that investigation was a pretext to pressure Powell into cutting interest rates or resigning.
The Justice Department has ended that investigation, though the U.S. Attorney for Washington, D.C., indicated it could be reopened; Powell has stated he will remain at the Fed until the matter is fully resolved.
Powell has expressed concern over a series of legal attacks on the Fed, which he says jeopardize its ability to set monetary policy independently, free from political interference. Warsh has not publicly stated a position on these actions by the Trump administration.
Warsh has stated plans to implement institutional changes at the Fed, including enhancing coordination with the Treasury Department and the administration on non-monetary policy matters and advancing efforts to reduce the size of the Fed's balance sheet.
Trump has stated outright that he expects Warsh to implement interest rate cuts upon taking office. Warsh, however, has said he made no promises to Trump regarding monetary policy.
The Fed Chair holds only one vote out of twelve on interest rate decisions and is one of nineteen participants in policy deliberations.
At last month's policy meeting, Fed policymakers voted to hold the policy rate steady in the 3.50%-3.75% range; three dissenting votes from central bank officials signaled openness to potential future rate hikes.
The Fed's next policy meeting is scheduled for June 16-17, which could also be Warsh's first meeting as Chair if confirmed.
Comments