Kevin Warsh Confirmed as Federal Reserve Chair; Stephen Miran Resigns

The Senate confirmed Kevin Warsh as chair of the Federal Reserve on Wednesday in a 54-45 vote that fell mostly along party lines. Warsh, President Trump's nominee, will take office this week after outgoing Chair Jerome Powell's term ends on Friday. Federal Reserve Governor Stephen Miran said he will resign from the central bank effective once incoming Chair Kevin Warsh is sworn into office, or shortly before.

The move was expected because Miran's seat on the Fed’s Board of Governors will be taken by Warsh. In a letter announcing his resignation, Miran was critical of the Fed’s approach to measuring inflation. ” Miran also said he’s excited about the changes that Warsh plans to make at the Fed, including a shake-up of its communications and balance sheet policies.

A noted dove, Miran voted for interest-rate cuts in every policy meeting during his period as a policymaker, including dissenting votes urging the central bank to cut by more than fellow officials agreed.

Warsh's confirmation as chair was delayed after President Trump waged a pressure campaign against the Fed. The Justice Department launched a criminal investigation of the central bank, which drew objections from some Republican senators. Sen. Thom Tillis, R-N.C., initially blocked a committee vote on the nomination to protest that probe.

Tillis dropped his opposition only after a U.S. attorney agreed to drop the probe. Warsh has argued there is room for the central bank to lower interest rates. He also promised to use his own judgment in setting monetary policy and not to take orders from the White House.

He denied charges from Sen. Price pressures have only increased since the war with Iran snarled tanker traffic in the Strait of Hormuz, triggering a spike in the cost of crude oil and gasoline. A report from the Labor Department Tuesday said the cost of living had increased 3.8% in the last twelve months, the biggest annual increase in nearly three years.

At the last rate-setting meeting in April, three members of the committee hinted their next move could as easily be a rate increase as a cut. Some members of that committee are wary of cutting rates at a time when inflation is stubbornly above their 2% target, and moving in the wrong direction.

Powell is determined to safeguard the institution from political pressure and has vowed to keep a low profile and not try to overshadow Warsh. Powell will continue to have a vote on the 12-member committee that sets interest rates. He has led the Fed since 2018 after being appointed by Trump, who later relentlessly criticized him for not moving more aggressively to lower borrowing costs.

Miran, who joined the Fed in September, initially took unpaid leave from his White House job when joining the central bank, before resigning from that post in February. Warsh previously served on the Fed's governing board from 2006 to 2011 and was a former Morgan Stanley executive who served as a liaison from the central bank to Wall Street during the financial crisis.

Warsh has suggested improvements in the way the government measures inflation and proposed changes in the way Fed policymakers communicate with the public.