In the U.S., a new head of the banking system was elected by a narrow margin – Bloomberg
Kevin Warsh has been appointed chairman of the Federal Reserve. The Senate confirmed his nomination by a narrow margin.
Bloomberg reports this.
Warsh’s election marked the beginning of the most controversial leadership change at the U.S. central bank in decades and served as a test of its political independence.
The result of Wednesday’s vote: 54 to 45, the narrowest margin in a vote to confirm a central bank chair in U.S. history.
Only one Democrat, John Fetterman of Pennsylvania, crossed party lines to support Varsh as Jerome Powell’s successor.
Bipartisan support for Fed nominees used to be the rule rather than the exception: former Fed Chair Alan Greenspan even received unanimous support for his reappointment in 2000.
Warsh, 56, who advised Trump on economic policy but was passed over for the Fed chairmanship in 2017 when the president chose Powell instead, is now set to replace Powell, whose term as chair ends on Friday.
The main question facing the new chair is whether he will uphold the Fed’s tradition of making interest rate decisions free from political pressure, given that less than six months remain before the midterm elections, in which the Republican majority in Congress—which supports Trump—is at stake.
During his confirmation hearing, Varsh promised that under his leadership, the Fed’s monetary policy would remain “absolutely independent.”
But Trump, who has repeatedly criticized Powell for not cutting rates fast enough, has made it clear that he expects Warsh to immediately lower borrowing costs.
Trump, who has repeatedly criticized Powell for not cutting rates quickly enough, made it clear that he expects Warsh to immediately lower borrowing costs.
For Warsha, this means he will face stiff resistance if he tries to steer the Fed toward a rate cut that officials do not consider justified.
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