President Donald Trump’s nominee to become chairman of the Federal Reserve System, Capital Region native Kevin Warsh, could be confirmed by the Senate within days.
The Shaker High School graduate faced a cascade of criticism from Democrats on the banking committee, including Sen. Elizabeth Warren of Massachusetts, the committee’s ranking member, who accused Warsh of being Trump’s “sock puppet” in Fed decision-making, charges that Warsh dismissed during his April 21 appearance before the committee.
“Fed independence means everything to me,” Warsh, 55, told the committee, which is led by Republican Sen. Tim Scott of South Carolina.
Warsh would succeed current Federal Reserve Chairman Jerome Powell. Trump has been highly critical of Powell for not lowering the Federal Reserve’s target interest rates fast enough after high interest rates were put into place in 2023 and 2024 to combat inflation under President Joe Biden.
At that time, the Fed’s target interest rates were set at between 5.25% and 5.50%, but are currently down to between 3.5% and 3.75%. The Fed’s target rate is a rate set for what banks should charge one another to borrow, helping guide federal economic policy. In general, while most businesses love lowering borrowing costs, the Federal Reserve will seek to raise rates to combat price inflation and maintain what the Fed calls “maximum” employment.
Powell’s term as chairman of the Fed board expires May 15, although he has indicated his intention to remain a voting member of the Fed board of governors until his board term expires Jan. 31, 2028.
The Senate vote on Warsh’s nomination comes at a tricky time for the U.S. economy, which is reeling from inflation and rising prices at the pump and elsewhere amid the war with Iran. Under Powell, the Fed has been wary of lowering rates too quickly, especially with gas prices punishing commuters and businesses.
As of Friday, AAA was reporting that the average price of a gallon of gas in the Capital Region was $4.53, up nearly 50 cents in one month.
Warsh’s vote before the full Senate had been held up by Republican Sen. Thom Tillis of North Carolina, a banking committee member who had insisted that a U.S. Department of Justice investigation into Powell and the Fed’s new headquarters building be dropped.
“With these assurances, I look forward to supporting Kevin Warsh’s confirmation,” Tillis said in a statement. “He is an outstanding nominee, and it is time for the Federal Reserve to move beyond this distraction and return its full attention to its mission.”