United States: Kevin Warsh, one step away from the presidency of the Fed

American senators confirmed on Tuesday, May 12, the arrival of Kevin Warsh to the board of governors of the United States central bank (Fed), the final step before they validate his nomination to lead the institution, amidst a surge in inflation in the country.

Kevin Warsh was designated by President Donald Trump to succeed Jerome Powell, whose term ends on Friday. Described as a “Trump puppet” by the Democratic opposition, he benefits from the votes of the slim Republican majority in the Senate and is expected to receive final approval soon.

In the meantime, he is set to become one of the seven members of the Federal Reserve board of governors, where he previously served from 2006 to 2011. He can stay for 14 years. Governors have long terms to protect monetary policy from government pressures and changes. President Trump believes he has a say. He continues to pressure the central bank and its officials. Many observers predict Kevin Warsh will face the same fate as Jerome Powell at the helm of the Fed, if he does not lower interest rates.

During his confirmation hearing in the Senate, Kevin Warsh pledged to “ensure that the conduct of monetary policy remains strictly independent.” He assured that the president did not ask him to lower interest rates and he would “never” engage in such a commitment.

Questioning his ability to resist pressure

Donald Trump’s economic advisor, Kevin Hassett, said Sunday that Kevin Warsh would become the next Fed chairman this week, stating that financial markets are “relieved” to see him arrive, expecting the new Fed leadership to help lower interest rates over time based on economic data.

Certain of his appointment as the new president of the United States central bank (Fed), Kevin Warsh is a figure in business circles who has convinced Donald Trump that he is the right man for the job, despite raising concerns about his ability to withstand interventions from the head of state, given his history of criticizing the institution.

Kevin Warsh knows he is under scrutiny by the financial circles he comes from. They knew him as a “hawk,” concerned about inflation, and suspect an opportunistic change.