The U.S. Senate has confirmed Kevin Warsh as the new chair of the Federal Reserve.
On May 13, local time, the Senate approved Warsh's nomination with a vote of 54 in favor and 45 against. All Republican senators supported the nomination, while only Senator Jon Tester from the Democratic Party voted in favor.
Warsh is set to succeed Jerome Powell, whose term ends on May 15. The term for the Fed chair is four years.
Warsh's first major challenge will be the Federal Open Market Committee (FOMC) meeting scheduled for June 16-17. Market observers are keen to see if he will signal a potential interest rate cut during his inaugural meeting.
President Donald Trump has publicly criticized Powell and pressured for interest rate cuts, which has shaped expectations around Warsh's nomination.
However, recent inflation data has weakened the case for an early rate cut. The Consumer Price Index (CPI) for April rose by 3.8% compared to the same month last year, while the Producer Price Index (PPI) increased by 6.0% year-over-year.
Rising energy prices due to the conflict between the U.S. and Iran are also contributing to inflationary pressures. If rising oil prices simultaneously affect consumer and producer prices, it could complicate the Fed's policy decisions.
Warsh has recently argued for the possibility of interest rate cuts based on improvements in productivity due to artificial intelligence, a reduction in long-term bond holdings, and alternative price indices. However, this rationale will need to undergo internal scrutiny and persuasion within the Fed.
Market participants are closely watching how Warsh will navigate the demands for rate cuts from the White House against the backdrop of inflationary pressures. The first FOMC meeting will likely provide insights into the new chair's policy direction and the Fed's independence.
* This article has been translated by AI.
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