Senate Confirms Kevin Warsh as New Fed Chair in 54-45 Vote

Washington — The Federal Reserve will get a new leader on Friday, but his power isn't as vast as it might seem.

The Senate confirmed Kevin Warsh, President Trump's pick for Fed chair, in a 54-45 vote on Wednesday. Trump's goals for the monetary policy job are clear: He has pressed the Fed to slash interest rates for months and lashed out at outgoing Chair Jerome Powell for not cutting rates rapidly.

Warsh, who vowed to be an "independent actor" and said he will not set policy based on Trump's views, will weigh in next month at the Fed's interest rate-setting committee meeting. His plans are unclear. He showed some openness to rate cuts last year, but during his prior stint on the Fed's Board of Governors, he favored tighter monetary policy.

Warsh won't decide rates alone. Fed chairs influence the rate-setting committee, but their power is not absolute. Experts say he must build consensus amid economic uncertainty, fears about the Iran war and persistent inflation. Most analysts expect rates to stay steady for months.

Powell plans to remain on the Fed board for now, after a Justice Department criminal probe prompted him to stay.

"The chair has the power to persuade," said Randall Kroszner, a former Fed governor with Warsh from 2006 to 2009 and now a University of Chicago professor. "And they're in a very strong position to be able to persuade. But they still need to persuade."

Interest rate targets come from the Federal Open Market Committee, which meets eight times a year. The chair has one vote among 12 members.

Seven voting members are Fed governors nominated by the president for 14-year terms. Currently, three are Trump appointees, including Warsh; three are Biden appointees; and the seventh is Powell, first named to the board under Obama and made chair under Trump.

The other five seats go to the New York Fed president and four rotating regional bank presidents. The White House has little control over regional presidents, hired for five-year terms by their banks and approved by Fed governors.

Just a quarter of the committee are direct Trump appointees for now. Powell was Trump's appointee as chair.

Former Fed officials say the chair's influence goes beyond one vote. Bill English, a former senior Fed staffer and FOMC secretary now at Yale, said chairs build "soft power" through good decisions, gaining credibility over time.

Sarah Bloom Raskin, a Fed governor from 2010 to 2014 and later Obama deputy Treasury secretary, said members seek consensus. "It conveys more force to the marketplace," she told CBS News. "Markets will pick up on a consensus vote."

The chair starts building consensus days before meetings by talking to regional presidents and board members. Staff reports often reach the chair first, and the chair directs focus on issues, Kroszner said.

Meetings last two days, with the chair as the focal point for economic views and policy options like changes to the federal funds rate. "The chair's job is to talk to everybody, try to convince them that the chair is right," English said.

The outcome may not match the chair's preference exactly, but the chair moves the committee as far as possible. The final statement details actions and future views; members debate wording closely. "That statement gets argued on quite extensively, including commas and quotation marks," Raskin said.

Dissents happen, often from regional presidents, but Trump appointees have dissented for lower rates recently. Votes are rarely close.

"Often, these things are close calls," Kroszner said. Members may defer to the chair but voice concerns.

Warsh's first meeting next month includes Powell, whose governor term ends in 2028. Most chairs leave when their term ends, but a Justice Department probe into a Fed office renovation kept Powell. U.S. Attorney Jeanine Pirro's office launched it; Powell saw it as pressure on Fed independence, which prosecutors denied. Pirro closed it last month but may reopen based on inspector general referrals.

Powell said he won't leave until the probe ends. "I am encouraged by recent developments, and I am watching the remaining steps in this process carefully," he said. "My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve."

Powell will be the first ex-chair on the board since Marriner Eccles in 1948. He plans a "low profile," respects the chair's role and wants to support the direction if possible.

Experts say Powell's views will draw notice. "I think his presence will be noticed," Raskin told CBS News. English called him a respected figure whose words carry weight, though he won't obstruct.

The Fed isn't expected to make big rate moves soon. The FOMC balances high employment and stable prices. It raised rates in 2022 and 2023 against inflation, then cut by one percentage point in late 2024 and 0.75 points in late 2025. Rates held steady in three 2027 meetings so far, with stable jobs and inflation above 2%. Powell cited the Iran war as uncertainty.

Investors see below 40% chance of changes at the five remaining 2027 meetings, per CME Group's FedWatch. Bank of America predicts no cuts until late 2027 amid rising inflation and strong jobs.

Tuesday data showed April inflation at 3.8% year-over-year, highest since mid-2023.

Warsh backed lower rates last year and said AI could curb inflation via productivity. Chicago Fed's Austan Goolsbee argued AI hype might raise it. Warsh was a hawk from 2006 to 2011.

Warsh called for Fed changes, including less communication and adjustments to balance sheet and bank rules. At his Senate hearing, he said Trump didn't ask him to predetermine rates and he favors diverse FOMC views.

English doubts immediate rate pushes given uncertainty. Raskin said any case for cuts needs strong analysis. Kroszner called Warsh a consensus-builder from their Bush administration work.