Kevin Warsh, President Trump’s nominee to lead the Federal Reserve, will appear before the Senate Banking Committee Tuesday morning for a confirmation hearing that will put a spotlight on his vision for reshaping the central bank at a pivotal moment for the economy.
The hearing, scheduled for 10 a.m., comes as inflation remains above the Fed’s two percent target and the war with Iran has complicated the economic outlook. High energy prices have raised consumer expectations for inflation and lowered consumer sentiment but have so far not weighed on consumer spending. The labor market remains resilient, with layoffs near historic lows and unemployment at just 4.3 percent, near the 4.2 percent Fed officials believe is consistent with non-inflationary growth at full-employment.
Chairman Jerome Powell’s term expires May 15, adding urgency to the confirmation process, although he can remain on the Fed’s board as a governor until January 2028. Powell has said he intends to remain chairman if no successor is confirmed by then, although the legal basis for that is murky. In the past, White House legal analysts in Republican and Democratic administrations have determined that the president of the U.S. gets to appoint an acting chair from among the sitting governors. President Trump has said that if Powell attempts to cling to the chair position, he would have to fire him.
In prepared remarks released Monday, Warsh mounted a firm defense of the Fed’s autonomy while signaling an appetite for institutional reform. “Monetary policy independence is essential,” he said, pledging to keep the conduct of monetary policy “strictly independent.” He also argued that independence is strengthened, not weakened, when Fed officials are open to hearing views from elected leaders — a stance he framed as a sign of institutional confidence rather than vulnerability.
Warsh called the current moment “perhaps the most significant hinge point in a couple of generations” and said a “reform-oriented Federal Reserve” is urgently needed. He took aim at what he described as institutional inertia, invoking Milton Friedman’s phrase about “the tyranny of the status quo” and warning that clinging to outdated models in a fast-changing economy is dangerous.
Sen. Dave McCormick, the Republican of Pennsylvania, who will introduce Warsh, called him a reformer who “will shake up a stagnant institution at a time when change is sorely needed.” McCormick’s prepared remarks praised Warsh as “uniquely suited” to confront challenges, including an overextended balance sheet and a poor record on inflation.
Warsh brings a strong depth of experience to the role. He served on the Fed’s Board of Governors from 2006 to 2011, playing a central role during the financial crisis as the board’s chief liaison to Wall Street. Since leaving the Fed, he has been a visiting fellow at the Hoover Institution and a partner at Duquesne Family Office alongside legendary investor Stanley Druckenmiller, giving him sustained hands-on experience in macroeconomics and financial markets.
Warsh has demonstrated that he can be intellectually nimble on interest rates and, more broadly, on monetary policy as economic circumstances evolve. As a Fed governor, he built a reputation as one of the board’s foremost inflation hawks, opposing extended low rates and large-scale bond purchases during the financial crisis. More recently, Warsh has argued that advances in artificial intelligence will contribute so much to productivity that the Fed has more room to cut.
Warsh has outlined an ambitious agenda for reshaping the central bank. He has called for shrinking the Fed’s $6.7 trillion balance sheet, overhauling its communications practices, and pulling the central bank back from what he sees as overreach into fiscal and social policy. “The Fed must stay in its lane,” he said in his prepared remarks.
Trump has made clear he wants lower interest rates, telling CNBC ahead of the hearing Tuesday that “we should have the lowest interest rate in the world.” Warsh has said he believes rates can move lower, though he has been less specific about timing — a degree of discretion that allies say reflects an understanding that the chair must build consensus among the 12 members of the rate-setting committee rather than dictate outcomes.
Fed officials, including those who have leaned toward interest rate cuts in recent months, have signaled that uncertainty around the effects of higher energy prices is likely to see the central bank holding rates steady in the near-term.
The main obstacle to Warsh’s confirmation is procedural rather than substantive. Sen. Thom Tillis of North Carolina has vowed to block the nomination until the Justice Department resolves a criminal investigation into Powell related to the Fed’s headquarters renovation. Republicans hold a 12-10 advantage on the committee, meaning Tillis alone could stall a vote. The White House has expressed confidence that Warsh will ultimately be confirmed.
Democrats plan to raise questions about Warsh’s personal finances and his independence from the president. If confirmed, he would be the wealthiest Fed chair in the central bank’s history, with disclosed assets of at least $192 million.
Sen. Elizabeth Warren of Massachusetts, the committee’s ranking Democrat, met with Warsh last week. She said, without evidence, that she has “deep concerns that if he is confirmed, he will be Donald Trump’s sock puppet.”
The hearing begins at 10 a.m. in the Dirksen Senate Office Building.