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The US Senate confirmed Kevin Warsh as the next chair of the Federal Reserve on Wednesday in a 54-45 vote. Warsh, nominated by President Donald Trump, will succeed Jerome Powell, whose term ends this Friday. The confirmation was largely split along party lines, with Pennsylvania’s John Fetterman serving as the only Democrat to vote in favor. Warsh’s victory marks the narrowest margin for a Fed chair since the Senate approval process began in 1977.
Warsh is facing a difficult balancing act when he steps into the role, with President Trump having made clear he expects his pick to lower the Fed's interest rate at a time when the US-Israel war in Iran is driving up the cost of living.
Usually, the central bank would seek to hold or raise interest rates when inflation is on the rise, to keep a lid on price increases. Indeed, following Tuesday's inflation figures, which showed prices rising at 3.8% annually in April, the fastest rate since May 2023, most economists now expect rates to be held until next year - with some even warning of a rise.
The rise in inflation has been driven largely by surging energy costs facing consumers, with the closure of the Strait of Hormuz having caused oil prices to spike.
But it also showed food, housing and airfare costs are on the rise.
Warsh will be under pressure from Trump to cut rates, which the president hopes will help the US economy. And he will be up against a similar fallout with the US president as his predecessor Powell, who now is the subject of a federal probe launched by the Trump administration.
Trump frequently clashed with Powell, describing him as incompetent and the worst Fed chair in history for not cutting rates fast enough.
During his confirmation hearing before the Senate Banking Committee, Warsh vowed he will not act as Trump's "sock puppet" and will fight to defend the central bank's independence.
But the ranking Democrat on the committee, Senator Elizabeth Warren, warned Warsh is "uniquely ill-suited" for the role and has been put in place to do Trump's bidding.
