WASHINGTON (AP) — The U.S. Senate on Wednesday confirmed Kevin Warsh to lead the Federal Reserve. President Donald Trump had picked the former Fed governor to replace Jerome Powell, believing that Warsh can deliver the booming economy the president had promised voters.
Warsh takes over a divided central bank wrestling with the economic fallout from the war started by the U.S. and Israel with Iran on Feb. 28. The conflict has driven up energy prices and made it even more difficult for the Fed to bring inflation down to its 2% target.
But Trump has demanded lower interest rates, not the higher ones that might be needed to keep inflation in check. Warsh, who had positioned himself as an inflation hawk earlier in his career, has more recently aligned himself with Trump’s views, arguing that artificial intelligence and other technologies can boost productivity and economic growth without igniting inflation.
Trump had consistently attacked Powell for refusing the deep rate cuts the president believes will boost the economy. And his Justice Department had launched an investigation into the Fed that was widely seen as an attempt to oust Powell. The legal drama delayed Warsh’s confirmation. Sen. Thom Tillis, a North Carolina Republican, said he would oppose Warsh until the Justice Department dropped the investigation, which it finally did last month.
In an unusual move, Powell said he would remain on the Fed’s governing board indefinitely after Warsh came on as chair, citing Trump’s “unprecedented” attacks on the central bank’s independence. Although Powell’s term as chair is ending, his term as a Fed governor doesn’t expire until 2028.