The Federal Reserve will have a new chair Friday when Kevin Warsh is sworn in, over a week after his Senate confirmation, replacing Jerome Powell.
Powell will remain on the Federal Reserve Board as a member — a rare move for outgoing chairs. His board term runs until 2028.
Warsh’s confirmation was less bipartisan than typical for incoming Fed chairs. He was confirmed 54-45, with only one Democrat voting in favor. By contrast, Powell’s 2018 confirmation as chair under President Donald Trump passed 84-13.
Powell’s tenure ended amid tensions with Trump, who repeatedly urged Powell and other board members to lower interest rates.
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The Fed’s key role is setting the federal funds rate, which influences the rates banks charge each other for overnight loans and indirectly affects borrowing costs for mortgages, auto loans, credit cards, and businesses.
Low rates generally spur growth, but policymakers caution that keeping rates too low for too long can fuel inflation. After U.S. inflation topped 9% in 2022, the Fed raised rates to their highest levels in decades. Inflation fel to below 3%, though higher borrowing costs have slowed credit access and job growth. Since the Iran War began, inflation has crept over 3%, likely putting an end to any additional rate cuts for the foreseeable future. Powell has said the Fed’s aim is to balance low inflation with continued job gains.
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Warsh, appointed to the board in 2006 by President George W. Bush, served as liaison to Wall Street during the 2008 financial crisis as the Fed implemented emergency liquidity programs for banks hit by subprime mortgage losses.
Before joining the board, Warsh was an economic adviser to Bush and executive secretary of the National Economic Council. More recently, he was a distinguished visiting fellow at Stanford University’s Hoover Institution and a vocal critic of Powell’s leadership at the Fed.
