Senate confirms Warsh as Fed governor, one step closer to chair

Former Federal Reserve Governor Kevin Warsh is another step closer to becoming the central bank’s next chair after the Senate confirmed him for a new 14-year term on the Fed’s Board of Governors on May 12.

The 51-45 vote to confirm President Donald Trump’s nominee fell along partisan lines, with Republicans supporting and Democrats generally opposing his confirmation. Lawmakers next begin the process to confirm Warsh, a former finance executive, to a concurrent four-year term as Fed chair. Senators are expected to hold that vote in the coming days.

Warsh, who has called for new tools and a different inflation framework at the central bank, is expected to take Fed Governor Stephen Miran’s seat on the Federal Reserve's seven-member Board of Governors. Trump appointed Miran in August to serve out the remainder of former Governor Adriana Kugler’s term, which technically ended Jan. 31, but Miran remained in the position until a successor could be confirmed.

Jerome Powell, whose term as chair ends May 15, said he'll remain on the Fed's board of governors, where his term doesn't expire until January 2028. While that move breaks precedent for outgoing chairs, Powell said he intends to “keep a low profile.” His decision comes as concerns about the central bank’s independence remain following the president’s persistent calls for lower rates and a now-dropped criminal probe into Powell that previously complicated Warsh's confirmation.

A legal case stemming from Trump's attempt to fire Fed Governor Lisa Cook last year is ongoing.

Warsh will rejoin the board at a time when policymakers are somewhat divided on the best path for the federal funds rate, which serves as a benchmark for interest rates around the country.  

Rising inflation tied to the Iran war and concerns about stagnation in the labor market outside of specific sectors like health care have put strain on both sides of the Fed’s dual mandate to maintain stable prices and maximum employment.

The rate-setting committee, on which every Fed governor serves, has remained in wait-and-see mode so far this year, having left the rate unchanged at a range of 3.5% to 3.75%. The committee will hold its next two-day meeting in mid-June, which could also be Warsh's first as chair.

Reach Rachel Barber at [email protected], and follow her on X @rachelbarber_.