President Trump has arrived in China for a state visit with a large American delegation, on the territory of what he sees as his country’s main adversary, China. From the war in Iran to the trade war on which a truce was reached in October, Trump and Xi will try to find agreements.
His appointment was confirmed by 54 votes to 45. Most Democratic opposition lawmakers voted against, doubting his ability to resist Donald Trump’s pressure for lower interest rates to stimulate the American economy. The president dismisses the current inflationary fever that the Federal Reserve is supposed to contain.
“The Americans deserve to know clearly if Mr. Warsh is determined to defend the Federal Reserve in this period of unprecedented attacks and political pressure from the White House,” said Democratic Senator Chris Van Hollen before the vote. “I hope he will act independently and make decisions based on facts and evidence, even when those decisions go against the president’s wishes,” added the Maryland lawmaker.
The upper house, where the presidential camp is in the majority, had already approved Kevin Warsh’s entry into the Fed Board of Governors for fourteen years on Tuesday. Donald Trump had considered appointing him to the top of the monetary institution since 2018, before preferring Jerome Powell, renewed under Democrat Joe Biden, whose presidency ends on Friday. Many observers predict the same fate for Kevin Warsh if he does not lower interest rates.
While the Fed president is a very influential voice, his vote is no heavier than that of the other eleven people who vote on US monetary policy. Most are now focused on inflation, which is rapidly deviating from the institution’s target (2%) due to the energy shock caused by the war in the Middle East. Consumer prices increased in April at a pace not seen in nearly three years (+3.8% year-on-year).
Kevin Warsh will hold his first monetary policy meeting on June 16 and 17. He returns to an institution he already knew as a mere governor (2006-2011) and will sit alongside officials whose choices he has sharply criticized. The first of them is Jerome Powell, who led the Fed for eight years and decided to remain on the Board of Governors, where he can serve until January 2028. The institution serves as a form of protection for those who have fallen out of favor with Donald Trump. There is also Governor Lisa Cook, whom the American president has also tried to oust, a matter on which the Supreme Court is expected to make a decision soon.
“I do not think that the independence of monetary policy is threatened when lawmakers express their views on interest rates. The Fed’s independence depends on the Fed itself,” said Kevin Warsh before the senators who auditioned him last month.
