The US Senate has confirmed Kevin Warsh as the new chair of the Federal Reserve, handing him one of those jobs that technically isn't the most powerful in government but definitely makes everyone's wallet nervous. The 54-45 vote on Wednesday was mostly a party-line affair, except for Democratic Senator John Fetterman of Pennsylvania, who apparently decided to make his own fun and joined the Republican majority. Warsh gets a four-year term as chair plus a 14-year appointment on the Fed's rate-setting board, which is essentially a career commitment that outlasts most marriages.
Warsh officially takes over on 14 May, when Jerome Powell's term as chair expires. He's stepping into the role at a delightful moment when the Trump administration is pressuring the Fed to lower rates, even as inflation sits at 3.8% and the Middle East continues doing whatever the Middle East does. The Fed sets interest rates, which is basically the economic equivalent of adjusting the thermostat - higher rates cool spending but risk unemployment, lower rates warm up the economy but can set prices on fire.
Warsh has echoed Trump's calls for lower rates, but must now convince the other 11 members of the Fed's voting board. With inflation rising, that pitch might land about as well as a lead balloon. An Ivy League economist and former Wall Street banker, Warsh previously served as a Fed governor from 2006 to 2011, where he was known as an "inflation hawk" - meaning he wanted higher interest rates back when that was his thing. He left the board in 2011 partly due to disagreements over the post-financial crisis stimulus, because consistency is for people who don't have job offers.
Warsh reportedly interviewed for the top Fed job in 2018, but Trump picked Powell instead - a decision the president now calls a "really big mistake," because hindsight is always 20/20 and also very loud. At his Senate banking committee hearing last month, Warsh said he would maintain Fed independence and "take politics out of monetary policy and monetary policy out of politics." However, he refused to answer whether Trump lost the 2020 election, which is the political equivalent of saying "I'm not touching that" while standing in a room full of Democrats who now call him Trump's "sock puppet."
Meanwhile, outgoing chair Jerome Powell announced last month that he will stay on the Fed board as a voting governor until the White House stops scrutinizing renovations at the central bank's headquarters that went over budget. Powell called the scrutiny "pretext" for wanting to pressure the Fed on rates, which is a bit like staying late at a party just to spite the host.