Kevin Warsh Confirmed as Fed Chair in 54-45 Senate Vote

Former Federal Reserve Governor Kevin Warsh won Senate confirmation as the next Fed chair on May 14 in a 54-45 vote, clearing the chamber by nine votes. All Republican senators voted for him, joined by Democratic Senator John Fetterman. The rest of the Democratic caucus opposed the nomination, except for one absent lawmaker, making the vote sharply partisan. Warsh could be sworn in as early as this week, and his term runs through 2030.

Fed chairs have required Senate confirmation since 1977. No Fed chair has been confirmed by such a sharply divided vote since then. The result highlights how deeply the two parties differ over Warsh.

Inflation concerns are intensifying after the producer price index posted a sharp increase earlier on May 14. At the same time, President Donald Trump has continued to demand lower interest rates. He attacked Jerome Powell last month after the Fed decided to leave rates unchanged. That puts Warsh in a difficult position ahead of the June Federal Open Market Committee meeting, with inflation readings at risk of rising further.

Warsh has argued that deregulation and a jump in productivity driven by artificial intelligence could allow the Fed to cut rates without stoking inflation. But that logic may prove harder to sustain during supply-chain disruptions such as a war involving Iran. Instead, he could face mounting pressure from those calling for rate increases.

Stephen Miran, a Fed governor appointed by Trump, has so far echoed the president's push for rate cuts. If Warsh joins that camp, the Fed's credibility could come under pressure. That, in turn, could affect US Treasury prices and the dollar.

If the Fed moves too far from market expectations, it could also derail the rally in stocks. It is still too early to judge which path Warsh will take. Either way, signals from the Fed are set to have a major impact on markets for the time being.

Lee Sang-eun, Washington correspondent, Hankyung.com, selee@hankyung.com