The Senate Banking Committee voted 13-11 along party lines to advance the nomination of Kevin Warsh as the next chair of the Federal Reserve, positioning him to potentially replace current chair Jerome Powell when Powell’s term ends on May 15. All Republican senators supported the nomination, while Democrats opposed it.
A full Senate confirmation vote is expected next month.
Warsh, who previously served as a Federal Reserve official, has become a vocal critic of the central bank’s recent policies. He argued that the inflation surge reaching 9.1% in 2022 represented the Fed’s most serious policy error in decades. Republicans backing his nomination said they believe he would bring stronger accountability and a different economic direction after years of inflation concerns tied to the Biden administration.
At the same time, Powell chaired what could be his final Federal Open Market Committee meeting as Fed chair. The central bank decided to leave interest rates unchanged at 3.6%, again resisting pressure from President Donald Trump to lower rates. Powell also indicated he may remain on the Federal Reserve’s Board of Governors after stepping down as chair, a move that would limit Trump’s ability to immediately appoint a new board member.
Treasury Secretary Scott Bessent criticized Powell’s decision to stay on the board, calling it unusual and contrary to institutional norms. Bessent praised Warsh as someone who could usher in a “new day” for the Fed with improved management and policymaking.
The developments come amid growing political conflict over the Federal Reserve’s independence. Earlier this year, the Justice Department opened a criminal inquiry into Powell related to testimony he gave before the Senate Banking Committee about the Fed’s headquarters renovation project. Prosecutors sought grand jury subpoenas connected to the investigation.
However, U.S. District Judge James Boasberg blocked the subpoenas in March, ruling that prosecutors failed to show evidence Powell committed a crime. Boasberg concluded the investigation appeared intended to pressure Powell into lowering interest rates or resigning.
U.S. Attorney Jeanine Pirro responded by announcing the Justice Department would appeal the ruling, accusing the judge of improperly interfering with the legal process. The broader dispute highlights escalating tensions between the Trump administration and the Federal Reserve over monetary policy, political influence, and the independence of the nation’s central bank.
