Kevin Warsh was approved by the Senate as the next chair of the Federal Reserve on Wednesday afternoon, inheriting an economy reckoning with persistent inflation and an increasingly divided group of policymakers.
The chamber confirmed him with a vote of 54-45, almost entirely along party lines. Pennsylvania Democrat John Fetterman was the lone crossover.
The vote came just days before Jerome Powell’s term as chair expires Friday. The Senate approved Warsh as a Fed governor on Tuesday.
Warsh, 56, is no stranger to the central bank. He previously served on its board of governors from 2006 to 2011. But the Fed job he is about to take on is considerably more difficult than the one he left. Inflation is at a three-year high, driven by tariffs and the economic fallout from war with Iran.
Markets aren’t expecting the Fed to move on interest rates anytime soon—even though Warsh has made no secret of his desire to lower them and has called for a “regime change” at the central bank.
“Kevin is uniquely suited to lead the Federal Reserve at this moment. He is battle-tested, principled, and brings the breadth of judgment this role demands,” said former Secretary of State Condoleezza Rice, now Tad and Dianne Taube Director of the Hoover Institution, where Warsh previously worked.
Getting here wasn’t simple. The last major obstacle to Warsh’s chairmanship was removed last month when Sen. Thom Tillis (R., N.C.) announced he would support Warsh’s confirmation, ending a standoff that had threatened to stall the nomination in the Senate Banking Committee.
Tillis had said he wouldn’t let Warsh out of committee as long as the Justice Department’s criminal investigation of Powell remained active. With Republicans holding a 12-10 edge on the Banking Committee, one defection was enough to block the nomination.
The logjam finally broke when U.S. Attorney Jeanine Pirro said her office was dropping the criminal probe and handing the matter to the Fed’s own inspector general, which has been investigating cost overruns from the central bank’s multibillion-dollar Washington headquarters renovation since last July.
Powell has said he plans to stay on the board, where his term runs through 2028, until he feels confident that any legal threat has fully passed.
Write to Nicole Goodkind at nicole.goodkind@barrons.com