Federal Reserve Chairman nominee Kevin Warsh will be sworn in during a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing on Tuesday, April 21, 2026, in the Dirksen Building.
Tom Williams | Cq-roll Call Inc. | Getty Images
It took eight and a half years, but on Wednesday, President Donald Trump finally succeeded in undoing one of the few mistakes he acknowledged as president. In November 2017, President Trump chose someone he deemed more malleable to lead the Fed, rather than the charismatic but youthful former Fed director Kevin Warsh. Trump has regretted it ever since.
The question engulfing markets as the Senate moves toward approval Wednesday is whether President Trump will also come to regret the decision. President Trump said in January that the Fed chairman “will change when he takes the job.” If Mr. Warsh loses Mr. Trump’s support, the new Fed chair may lack the bulwark of Congressional support that supported Mr. Powell’s resistance to Mr. Trump.
The success of Mr. Warsh’s “regime change” mission to the Fed will depend on his ability to navigate this extremely difficult political climate. But although Mr. Warsh begins his term at a significant political disadvantage compared to Mr. Powell, Mr. Warsh’s history and relationship with Mr. Trump suggest that the new chairman is more likely to blaze a trail of independence than Mr. Warsh’s critics believe. And he may do so in a cooperative manner that surprises those bracing for impending friction.
Mr. Warsh, 56, was approved Wednesday by just 54 votes, with Pennsylvania Sen. John Fetterman the only Democrat voting “yes.” This is the lowest level of support for a Fed chairman since he was confirmed by the Senate in 1977. The previous lowest support was for Democratic nominee Janet Yellen in 2014, who received 56 votes, including 11 from Republicans.
Among those who voted against Mr. Warsh was Minority Leader Chuck Schumer (DN.Y.). This is a reversal from 2006, when Mr. Schumer endorsed Mr. Warsh to lead the Fed because Mr. Schumer “clearly knows that the Fed must be independent, non-ideological, and nonpartisan.” Mr. Warsh was approved unanimously that year.
Mr. Powell has found an important ally in the Senate in the face of Mr. Trump’s attacks. Sen. Thom Tillis, RN.C., threatened to delay Mr. Warsh’s confirmation until the Justice Department drops its criminal investigation into the Fed. U.S. Attorney for the District of Columbia Jeanine Pirro did so in April, clearing the way for Mr. Warsh.
A study published in April by University of Maryland researchers who studied the calendars of Fed chairmen found that “Mr. Powell met with U.S. senators more than twice as often as his predecessor.”
Many longtime Fed watchers already view Mr. Warsh as a lost cause, either because they have been deluded into thinking he can shake up the Fed’s rigid bureaucracy, or because he is merely a “sock puppet” for Mr. Trump, as Mr. Warsh’s most prominent progressive critic, Sen. Elizabeth Warren (D-Mass.), puts it.
But Mr. Warsh is not a bystander who has been lucky enough to occupy perhaps the most influential role in business. Trump publicly debated whether to give him the job. Before winning the 2024 election, he offered the Fed post to Scott Bessent, who is now Treasury Secretary.
Mr. Warsh advised Mr. Trump last year not to fire Powell, a decision that likely benefited Mr. Warsh personally at the expense of the Fed’s credibility. He won Trump’s nomination in January amid a whispering campaign that concerns about inflation and tariffs made him unsuitable for the position.
To be sure, Warsh doesn’t think everyone is a liberal. He has been publicly conservative since running for and winning the student senate election at Stanford University. He continued to work as a research assistant for his intellectual idol, the conservative economist Milton Friedman. But even more than Mr. Warsh’s ideology, what makes him politically powerful is his ability to connect his own set of beliefs with the ideas and ambitions of others, said John Cogan, an economist at Stanford University.
“I know him to be someone who can understand other points of view and tries to find common ground,” Cogan said.
Mr. Warsh will need to immediately demonstrate his skills as a political operator both inside and outside the Fed’s walls.
Inside the Fed, Mr. Warsh will need to convene a committee of rate voters wary of the risk of a resurgence in inflation. According to federal data released this week, the consumer price index rose to 3.8% in April due to the energy shock caused by the Iran war. Even discounting volatile energy prices, so-called core inflation has now risen for three consecutive months, raising concerns that some Fed members are not setting interest rates high enough to rein in price increases regardless of what’s happening in the Middle East.
Lowering interest rates may be a tall order
The Fed will have little appetite to cut rates as quickly as President Trump demands. The president recently said he would be disappointed if Warsh couldn’t deliver on that.
Warsh told senators during his confirmation hearing that he never promised Trump could do it. And he has framed his mission as Fed chair around the idea that the central bank has become too fixated on the minutiae of short-term economic indicators, at the expense of resetting market confidence.
In Warsh’s view, evidence of that loss of credibility is visible in inflation expectations: Neither market participants nor consumers surveyed by the Fed expect inflation to return to the Fed’s 2% target within five years.
Mr. Warsh will seek to reset those expectations by taking the Fed out of the business of promising the future of interest rates in the form of forward guidance, revamping its communications to give the Fed more of a unified voice, updating the data sources it relies on, and striking a new deal with the Treasury on how it shares responsibility for running the economy.
Will Mr. Warsh be able to follow through and deliver the interest rate cuts expected by Mr. Trump? The market doesn’t think so, and there is a 1% chance that he will cut rates this year, according to CME FedWatch.
If Mr. Warsh fails to deliver cuts in June, there is a clear possibility that President Trump will explode. But that idea presupposes Warsh’s passivity. Another option is for the Fed chairman, who has spent nearly a decade preparing for this moment, to continue convincing the president that he can achieve the golden age that Trump so desperately desires. This is not the first time President Trump has suddenly pivoted from ideas coming from people he trusts to politically expedient ideas.
Warsh’s divided support may say more about how the country has changed than his politics. His pitch was that he understood better than anyone how to ensure the Fed’s lasting influence as a stabilizing force in American life despite widespread political deterioration.
He now has a chance to prove himself. If he fails, America’s bulwark of economic power will decline with him.
