The confirmation hearing for President Donald Trump's pick to lead the central bank has been set for next week.
Next week's hearing is expected to be closely watched for signs about the future direction of monetary policy.
In recent years, Warsh has harshly criticized the Fed’s policies, including its low interest rates coming out of the pandemic, which he believes contributed to the country's largest inflation spike in four decades. Warsh now says he supports Trump’s demands for lower rates, saying that productivity gains from artificial intelligence will boost the economy more quickly without spurring inflation, which would allow the Fed to reduce borrowing costs.
Many Fed officials, however, disagree that the development of AI would support such rate cuts.
Warsh became the youngest governor on the Fed’s seven-member board at 35 years old. He previously served as an investment banker and an economic aide in George W. Bush’s administration. In 2017, Warsh was previously a runner-up to lead the central bank, but Trump instead chose Powell to serve in the role. The president has claimed that he was given bad advice about Powell.
According to White House economic advisor Kevin Hassett, Warsh has "enormous" bipartisan support in the upper chamber and should be confirmed by May, when Powell's term as Fed chair ends.
Sen. Thom Tillis (R-N.C.), a member of the Senate Banking Committee, plans to oppose confirming Warsh until a criminal investigation into current Fed chair Jerome Powell has been resolved. Powell revealed earlier this year that the Justice Department had subpoenaed the Fed over Powell’s Senate testimony about the central bank’s $2.5 billion building renovation project.
Warsh has criticized the Federal Reserve’s policies in recent years, including its low interest rate policies coming out of the pandemic, which he said contributed to the country's largest inflation spike in four decades, in 2021 and 2022.
Federal Reserve ethics rules limit what Fed officials and their immediate families can hold and how they can manage their investments. Walsh has pledged to divest some assets if confirmed.
Warsh needs a majority approval vote in the Senate to be confirmed as Federal Reserve chair.