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Despite U.S. President Donald Trump’s public expectations that incoming Federal Reserve Chair Kevin Warsh will cut interest rates, one investment expert believes the central bank may actually be forced to move in the opposite direction.
Skyler Weinand, Chief Investment Officer at
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Long-term US borrowing costs climbed to levels not seen since before the global financial crisis after the Treasury auctioned $25bn (€21.3bn) in 30-year bonds at a high yield of 5.058% on Wednesday, according to the department’s own data.
The sale came only hours after the US Senate voted to confirm former Federal Reserve governor Kevin Warsh as the next chairman, succeeding Jerome Powell.
The auction result immediately complicated the backdrop for Warsh’s arrival at the central bank, underlining the pressure facing policymakers as inflation is rising.
At the time of writing on Thursday, US 30-year bonds are trading at 5.02% while 10-year notes are selling with a yield of 4.44%.
US inflation figures released earlier this week showed consumer prices rose 3.8% from April 2025 as the 10-week Iran war pushed energy costs higher and distanced inflation from the Federal Reserve’s 2% target.
Producer price data also pointed to persistent underlying cost pressures across the economy, reinforcing expectations that the central bank may struggle to ease monetary policy quickly.
Rising Treasury yields have broad implications for the economy because they influence borrowing costs on mortgages, corporate debt and other forms of credit.
Higher long-term yields can also increase financing costs for the US government at a time when public debt is nearing $40 trillion (€34.1tn).
Investors are increasingly concerned that a combination of resilient economic growth, elevated energy prices and sustained government borrowing could keep inflationary pressures alive despite two years of restrictive monetary policy.
The yield on the benchmark 30-year Treasury bond being auctioned above 5% is a symbolic threshold last reached in 2007 before the onset of the global financial crisis.
While market conditions today differ substantially from that period, the move nonetheless underscores the sharp repricing that has taken place in global bond markets over the past two years.
Kevin Warsh takes over the Federal Reserve at a delicate moment for the US economy.
The former Morgan Stanley banker and Fed governor has previously argued in favour of maintaining the central bank’s credibility on inflation, while also signalling support for reforms to the institution’s communication strategy and balance sheet policies.
Warsh’s confirmation comes as financial markets remain divided over how aggressively the Federal Reserve should respond to persistent inflation pressures.
Some investors believe rates may need to stay higher for an extended period, while others warn that maintaining tight monetary conditions for too long could weigh heavily on economic growth and employment.
The main driver of the rise in inflation is the current disruption to global energy markets caused by the Iran war which also leaves the central bank at the mercy of geopolitics and not able to effectively control the situation.
Analysts stated that Wednesday’s Treasury auction illustrated the immediate challenge confronting the incoming Fed chair.
Elevated bond yields can help tighten financial conditions without additional rate increases from the central bank, but they can also amplify risks for heavily indebted households, businesses and the federal government itself.
For Warsh, the market reaction served as an early reminder that restoring confidence on inflation may prove more complicated than simply holding interest rates at restrictive levels.
WASHINGTON — The Senate confirmed President Trump’s nominee to lead the Federal Reserve, Kevin Warsh, bringing new leadership to the world’s most powerful central bank at a fraught moment for the global economy.
Warsh was confirmed Wednesday in a largely party-line vote. His nomination had been thrown into doubt in recent months after Republican Sen. Thom Tillis of North Carolina said he would block the nomination while the Justice Department investigated Fed Chair Jerome H. Powell. The Powell inquiry was dropped in April, clearing the way for the Senate to confirm Warsh.
Senate Majority Leader John Thune (R-S.D.) urged colleagues to support Warsh during a floor speech Wednesday morning, saying it’s crucial that a Fed chair “understand not only the macro” but also “appreciate the microeconomy: and that’s the hardworking Americans, their jobs and their livelihoods.”
“Kevin Warsh is just such a person,” Thune said.
Warsh, 56, a former top Fed official, will become chair at an unusually difficult time for the independent agency.
Inflation has topped the Fed’s 2% target for five years and is now rising faster because of surging gas prices. The Fed’s interest rate-setting committee is divided and saw the most dissenting votes in more than three decades last month. And Powell, after years of personal attacks from the Republican president and an unprecedented legal investigation by the Justice Department, plans to stay on the Fed’s board even after his term as chair ends, potentially creating a competing power center.
The Fed has faced numerous threats to its independence from Trump, who has repeatedly attacked Powell for not cutting interest rates. Trump also sought to fire Fed Gov. Lisa Cook and launched an investigation into brief Senate testimony by Powell on a building renovation.
Kevin Hassett, director of the White House’s National Economic Council, said in a Fox News interview on Sunday that he believes the markets are relieved that Warsh “is going to help lower interest rates over time.”
“Obviously, data driven,” said Hassett. “I’m not putting any pressure on Kevin Warsh.”
In December, Trump said on his social media platform that he wanted a Fed chair who would cut interest rates when the stock market rose — the opposite of what traditional economics would prescribe — and added, “Anyone that disagrees with me will never be the Fed chairman!”
Trump’s comments have fueled concerns over whether Warsh will set rates based on economic conditions or seek to cut rates to appease Trump, even if doing so could worsen inflation. At Warsh’s confirmation hearing last month, Sen. Elizabeth Warren, a Democrat from Massachusetts, derided him as a “sock puppet” for Trump. Warsh declined to say that Democrat Joe Biden had won the 2020 election against Trump, who has falsely claimed that voter fraud cost him reelection.
Still, Warsh denied at the hearing that Trump had pressured him to reduce the Fed’s key rate.
“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said then. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”
Warsh has been highly critical of the Fed’s recent track record, particularly the inflation spike in 2021-22, the worst in four decades, and has called for “regime change.” Yet he has provided only broad outlines of what that change would involve.
He has called for limiting the Fed’s communications, which would be a sharp shift after decades of increasing transparency. He has argued that some of its communications tools, such as quarterly forecasts of where its key rate may head, have made it harder for officials to switch gears.
Senate Democrats also have condemned Warsh for not fully divulging the details of his extensive wealth, which disclosures show amounts to at least $100 million. His investments include stakes in Polymarket and SpaceX, but he hasn’t revealed how large those holdings are. He promised to sell all such assets within 90 days of being sworn in.
“He will be the wealthiest Fed chair in history, but he refuses to provide transparency to the American people about who he is entangled with,” Warren said.
The Fed is still grappling with how to respond to the 50% jump in gas prices from the Iran war. The increase has boosted inflation, which reached 3.8% in April.
The Fed is tasked by Congress with keeping prices stable, which it seeks to do by raising its short-term rate to make borrowing and spending more expensive, cooling growth and inflation.
The Fed typically looks past temporary price increases that stem from supply disruptions, such as the war’s cutoff of oil through the Strait of Hormuz, because those prices typically level off — or even fall back down — once the supply is restored.
But the Fed also followed that approach after the COVID-19 pandemic snarled global supply chains for goods, lifting prices for things such as cars, furniture and electronics. Inflation turned out to last longer than expected, and Powell and other Fed officials have acknowledged they waited too long to raise rates. Inflation surged to 9.1% by June 2022.
The Fed’s rate-setting committee has kept rates unchanged for three straight meetings as it evaluates the effect of the gas price spike. At its most recent meeting last month, three members of the committee objected to language that suggested its next move would be a rate cut. They preferred more neutral language that would allow for a hike. Many Fed watchers saw those dissents as a warning shot to Warsh that he won’t be able to easily engineer rate reductions.
A fourth member of the 12-member committee, Stephen Miran, dissented in favor of a rate cut, as he has at every meeting since Trump appointed him to the Fed’s board last September. Miran is serving until a replacement is named, and Warsh will take his spot.
Powell, meanwhile, said at a news conference April 29 that he would remain as a Fed governor until the Justice Department closes its investigation into the Fed’s building project, the first time a chair may stay on the board for an extended period since 1948. His term as a governor lasts until January 2028.
U.S. Atty. Jeanine Pirro has dropped the government’s investigation, but she has said it could be reopened if the Fed’s inspector general office, which has looked into the renovation project since last July, finds evidence of criminal activity.
Rugaber and Cappelletti write for the Associated Press.
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Goldman forecast for Fed rate cuts delayed on inflation
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I walked around a street fair in Irvine over the weekend, checking out the crowd while waiting for my daughter’s dance team to perform. We were a few short miles from Angel Stadium, but you wouldn’t have known it: lots of people wearing Dodgers caps, someone wearing a Shohei Ohtani cap, someone else wearing an Ohtani jersey, someone else wearing a Clayton Kershaw jersey, a dog wearing a Dodgers bandana, and people repping the Padres, Giants, Athletics and Yankees.
After 25 minutes, someone walked by in an Angels cap.
If the passion wanes, apathy can set in. I wondered if that is where the Angels might find themselves now, with a slice of their fan base finding a more enjoyable way to spend its summers than watching one losing season after another, and with the shadow of baseball’s best team extending ever more securely into Orange County.
Something else happened over the weekend that made me wonder. On the heels of a winless road trip, and on the day before the Angels would claim the worst record in the major leagues, Angels general manager Perry Minasian said this to reporters: “Our best baseball is in front of us. There’s no doubt about that.”
No doubt?
Angels general manager Perry Minasian declined to predict in the team would make the playoffs this season.
(Elsa Garrison / Getty Images)
On the Angels’ broadcast the previous night, reporter Erica Weston presented play-by-play announcer Wayne Randazzo with a birthday gift: a figurine of Grogu, a character in the Star Wars family. Randazzo said he would keep Grogu in the broadcast booth, as a good luck charm for the Angels.
“We certainly could use one,” Randazzo said.
Minasian, the sixth-year general manager, has yet to deliver a team that finished better than 17 games out of first place. On Wednesday, I asked him to explain why he was so confident in saying he had “no doubt” the team’s best days were ahead.
“We’ve been very competitive,” Minasian said. “Our wins and losses aren’t where we want them to be, but we have lost a lot of one-run games, a lot of tough games.”
The Angels have lost six one-run games. So have the Yankees, the team with the best record in the American League.
The Angels’ run differential is minus-14. They are four games behind in the AL West, where the first-place Athletics have a .500 record and a minus-21 run differential. You never know.
So far, however, the Angels’ offense is all about the three true outcomes: They strike out the most of any major league team and rank among the top six in walks and home runs, but they do not rank among the top 10 in runs. Only five teams have given up more runs.
“Going to the bullpen has been a harbinger of danger for the Angels,” Randazzo told viewers. The Angels’ bullpen entered Wednesday with a 5.35 earned-run average, the highest in the AL.
Owner Arte Moreno cut payroll this year, amid the implosion of the FanDuel regional sports networks. Edwin Díaz was not walking through the bullpen door.
Angels owner Arte Moreno.
(Ashley Landis / Associated Press)
But the Dodgers find solid bullpen arms in ways beyond buying them: Evan Phillips was cast off by the Baltimore Orioles during a 110-loss season; Alex Vesia was acquired from the Miami Marlins after putting up an 18.69 ERA in his first five major league games.
“We’ve had guys like that,” Minasian said.
He cited Brock Burke, a waiver claim who gave the Angels two solid seasons in middle relief. Minasian traded him last winter for outfielder Josh Lowe, and any general manager would trade a middle reliever for a middle-of-the-order bat. To this point, Lowe has a .198 on-base percentage and a .287 slugging percentage.
Lowe is but a data point in illustrating this primary point: Minasian’s margin for error is smaller than it otherwise would have been if Moreno had not withdrawn from the market for top-tier free agents or had approved trading Ohtani for elite prospects that would have accelerated rebuilding. Smaller, but other teams do more with less.
“We’ve got to be able to develop our own players,” Minasian said.
On the day Minasian said he had “no doubt” better days were ahead for his team, the Angels, their triple-A affiliate and their double-A affiliate all were in last place.
Analysts perennially rank the Angels’ farm system among baseball’s worst. Minasian said he’ll put his faith in four homegrown starters: José Soriano, Reid Detmers, Jack Kochanowicz and Walbert Ureña. Their combined ERA so far: 2.99.
“When you look at good teams and sustainable winners, they build rotations, whether that’s through trades or free agency or your own,” Minasian said. “We’re doing it with our own. You can’t microwave that overnight.”
You can’t make fans wait forever for October either. Angels fans have heard enough about building a competitive team and needing patience.
They have not seen their team in a playoff game in 12 years. When are they going to see that?
Angels pitcher Walbert Ureña delivers against the New York Mets at Angel Stadium on May 1.
(Luke Hales / Getty Images)
“I’m not in the prediction business,” said Minasian, whose contract expires after this season. “They’re going to see a team that plays hard every day. They’re going to see young, talented players day in and day out.”
That’s fine, but when are they going to see a winning team?
“The proof will be in the pudding,” he said. “It doesn’t matter what I say. I could say all these things. At the end of the day, we’re going to go play 162 games. We’ll see where we end up and who’s done what, and we’ll go from there.”
On Wednesday, the Angels won a series for the first time since April 12. They’re 3-2 with Grogu in the broadcast booth.
The schedule gets more challenging: a trip to Toronto and Cleveland, then back to the Big A to play the Dodgers. The same distant Angel Stadium seat available on the resale market for Wednesday’s game for $5 (fees included) is available for $103 for the opener of the Dodgers series.
Orange County loves a winner. There was a long line at that Irvine street fair to collect souvenirs from one booth — the one for the Anaheim Ducks.
WASHINGTON — The Senate Banking Committee voted on party lines Wednesday to approve Kevin Warsh as the next chair of the Federal Reserve to replace Jerome Powell, a longtime target of President Trump’s insults for not cutting borrowing costs as far as the president wanted.
The vote was 13-11, with all Republican senators voting in favor and Democrats opposed.
Warsh is a former top Fed official but has also been a sharp critic of the institution and Powell’s leadership. He has called the inflation spike to 9.1% in 2022 the central bank’s biggest policy mistake in four decades. A vote on his nomination probably won’t take place until next month, but he could be confirmed by the time Powell’s term as chair ends May 15.
The Senate Banking vote is the first of two key events surrounding the future of the Fed’s leadership. Also Wednesday, Powell is presiding over what will probably be his last meeting of the Fed’s interest rate-setting committee. At a news conference Wednesday afternoon, Powell may indicate whether he will remain as a member of the central bank’s board of governors after his term as chair ends.
It would be unusual for Powell to stay, but doing so would deprive the Trump administration of an opportunity to appoint a new member to the board. Powell may choose to stay if he sees it as necessary to protect the Fed’s independence, which has become part of his legacy as its leader.
Sen. Tim Scott, a South Carolina Republican and chair of the committee, said Warsh is “battle tested” and added that, “It is incredibly important that we break the bind of Bidenomics on households across this nation.”
Sen. Elizabeth Warren, a Democrat from Massachusetts, criticized the banking panel for voting on Warsh’s nomination. Doing so “will bring the president one step closer to completing his illegal attempt to seize control of the Fed and artificially juice the economy,” she said, citing Trump’s effort to fire Fed governor Lisa Cook and investigate Powell.
The Fed on Wednesday is widely expected to leave its key rate unchanged at about 3.6% for its third straight meeting, defying Trump’s calls for lower rates.
Warsh has called for “regime change” at the Fed and could alter many of its practices, including the economics models it focuses on, how it communicates with the public, and how large its bondholdings will be in the long run.
Those changes could affect financial markets, but otherwise won’t necessarily be visible to the general public. But Warsh has also advocated for additional interest rate cuts, which could potentially lower borrowing costs for mortgages, auto loans, and business loans. He will face barriers to implementing those cuts anytime soon, however, largely because the Iran war has caused a spike in gas prices, pushing inflation to a two-year high of 3.3%.
The Fed typically keeps rates elevated, or even raises them, to combat worsening inflation.
Most of the other 11 members of the Fed’s rate-setting committee have indicated they would prefer to wait and evaluate where inflation and the economy are headed before making any changes to rates. It could take time for Warsh to build up enough influence to push for rapid rate cuts. He will also replace Stephen Miran, a member of the Fed’s rate-setting committee who was appointed by Trump last September and is the most consistent advocate for rate reductions at the central bank.
Warsh also faces questions about his independence from the White House, a key issue that dogged him during a Senate Banking hearing last week. On Wednesday, Warren said, “Mr. Warsh is a Trump sock puppet who is so cowed by the president that he could not even say that Trump lost the 2020 election.”
Last December, Trump called for much lower interest rates in a social media post, and added that “anyone who does not agree with me will never be Fed chair!” And just last week he told Fox Business that he expects rates to head lower, “when Kevin gets in.”
Warsh denied at his hearing, however, that Trump had ever pressured him directly to cut rates.
Rugaber writes for the Associated Press.
April 26 (UPI) — U.S. Sen. Thom Tillis, R-N.C., said on Sunday that he will end his blockade of Kevin Warsh’s confirmation as Federal Reserve chair after the Department of Justice ended its investigation into current chair Jerome Powell.
U.S. Attorney Jeanine Pirro on Friday said the Justice Department was ending its investigation into Powell over the Fed’s budget for renovations to its headquarters and has threatened him with criminal charges over testimony he gave about the costs.
Tillis made the announcement during an interview on NBC News’ “Meet The Press,” because the department assured him that it has “completely and fully ended” the investigation.
He had previously said he would block all Trump nominees until the probe was dropped.
“We worked a lot over the weekend to make sure that we were very clear that we have assurances from the Department of Justice that I needed to feel like they were not using the department as a weapon to threaten the independence of the Fed,” Tillis told NBC News.
The Justice Department launched a criminal investigation into Powell in January after President Donald Trump questioned the Fed being over budget on renovations to its headquarters in Washington, D.C.
The investigation was condemned by several members of Congress as improper, including Tillis, because it was seen as politically motivated punishment from Trump for not setting interest rates at levels he preferred.
Pirro said Friday that she has asked the Federal Reserve’s inspector general to investigate the renovation costs, which she said is “billions of dollars” over budget, and that she expects a “comprehensive report” on the matter.
She noted, however, that she “will not hesitate to restart a criminal investigation should the facts warrant doing so.”
The announcement on Friday is expected to clear the path for the confirmation of his successor, Kevin Warsh.
Published On 24 Apr 202624 Apr 2026
The United States Department of Justice has ended its probe into US Federal Reserve chair Jerome Powell, clearing a major roadblock to the confirmation of his successor, Kevin Warsh.
US Attorney for the District of Columbia Jeannine Pirro said on X on Friday that her office was ending its probe into the Fed’s extensive building renovations because the Fed’s inspector general would scrutinise them instead.
list of 4 itemsend of list
Pirro, a Trump ally and the top federal prosecutor in Washington, DC, said she had instead asked the Fed’s internal watchdog, the Office of Inspector General, to examine cost overruns in renovations of the central bank’s Washington headquarters.
“The IG has the authority to hold the Federal Reserve accountable to American taxpayers,” Pirro said in a social media post. “I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas.”
The move could lead to a swift confirmation vote by the Senate for Warsh, a former top Fed official whom US President Donald Trump, a Republican, nominated in January to replace Powell. Powell’s term as chair ends May 15.
Senator Thom Tillis, a North Carolina Republican, had said he would oppose Warsh until the investigation was resolved, effectively blocking his confirmation.
The leadership transition at the world’s leading central bank could now proceed quickly.
Republicans praised Warsh during a Tuesday hearing even as Democrats questioned his independence from Trump, the lack of transparency around some of his financial holdings, and what they said was his flip-flopping on interest rates. Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the committee, questioned if Warsh will be a “sock puppet“.
Still, Trump’s previous appointment to the Fed’s board of governors, Stephen Miran, was approved by the full Senate just 13 days after his nomination.
The investigation was among several undertaken by the Department of Justice into Trump’s perceived adversaries. For months, it had failed to gain traction as prosecutors struggled to articulate a basis to suspect criminal conduct.
A prosecutor handling the case conceded at a closed-door court hearing in March that the government had not yet found any evidence of a crime, and a judge subsequently quashed subpoenas issued to the Federal Reserve.
The judge, James Boasberg, said prosecutors had produced “essentially zero evidence” to suspect Powell of a crime. Boasberg branded prosecutors’ justification for the subpoenas as “thin and unsubstantiated”.
More recently, prosecutors made an unannounced visit to a construction site at the Fed’s headquarters but were turned away, drawing a rebuke from a defence lawyer in the case who called the manoeuvre “not appropriate”.
Warsh said during the Senate hearing on Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.
“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said during the hearing. “Nor would I ever agree to do so if he had … I will be an independent actor if confirmed as chair of the Federal Reserve.”
Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh did not immediately cut rates and responded, “I would.”
The decision to abandon the investigation represents a rare pullback for a Department of Justice that over the last year has moved aggressively, albeit unsuccessfully, to prosecute public figures the president does not like.
Robert Hur, an lawyer for the Federal Reserve Board of Governors, did not immediately respond on Friday to an email seeking comment.
WASHINGTON — The Justice Department has ended its probe into Federal Reserve chair Jerome Powell, clearing a major roadblock to the confirmation of his successor, Kevin Warsh.
U.S. Attorney for the District of Columbia Jeannine Pirro said on X that her office was ending its probe into the Fed’s extensive building renovations because the Fed’s Inspector General would scrutinize them instead.
The decision ends an investigation, one of several undertaken by the Justice Department into President Trump’s perceived adversaries, that for months had failed to gain traction as prosecutors struggled to articulate a basis to suspect criminal conduct.
A prosecutor handling the case conceded at a closed-door court hearing in March that the government hadn’t yet found any evidence of a crime, and a judge subsequently quashed subpoenas issued to the Federal Reserve. The judge, James Boasberg, said prosecutors had produced “essentially zero evidence” to suspect Powell of a crime. Boasberg prosecutors’ justification for the subpoenas as “thin and unsubstantiated.”
More recently, prosecutors made an unannounced visit to a construction site at the Fed’s headquarters but were turned away, drawing a rebuke from a defense attorney in the case who called the maneuver “not appropriate.”
The move could lead to a swift confirmation vote by the Senate for Warsh, a former top Fed official whom Trump, a Republican, nominated in January to replace Powell, whose term as chair ends May 15. Sen. Thom Tillis, a North Carolina Republican, has said he would oppose Warsh until the investigation was resolved, effectively blocking his confirmation.
Warsh said Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.
“The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”
Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, “I would.”
Kevin Warsh, the man nominated to lead the Federal Reserve, the world’s most important financial institution, told the US Senate Banking Committee on Tuesday that he had made no secret agreements with the White House over interest rate policy, defending his professional integrity.
He said he would act independently if confirmed to succeed Jerome Powell, despite continued public pressure from US President Donald Trump for lower borrowing costs.
The question of that independence was put sharply to him during the hearing, when Republican Senator John Kennedy asked whether he would be Trump’s “human sock puppet”. Warsh replied: “Absolutely not.”
His comments came amid broader concerns on Capitol Hill about the future direction of the central bank, with lawmakers divided over his past record and approach to monetary policy.
Warsh insisted that the President had never asked him to commit to any specific interest rate path and said he would not have agreed to such a request.
The hearing highlighted the significant pressure facing the Federal Reserve as it maintains its independence while addressing inflation, which remains at 3.3%.
Just hours before the session began, US President Donald Trump stated in a CNBC interview that he would be disappointed if Warsh did not immediately implement rate cuts.
This current friction suggests that the White House may struggle to secure the necessary votes to confirm Warsh before Powell’s term as Fed Chair expires on 15 May.
Democratic senators were particularly vocal in their scepticism, accusing Warsh of shifting his economic stance to suit the political climate.
US Senator Elizabeth Warren labelled the nominee a “sock puppet”, suggesting his installation would facilitate an “illegal takeover” of the institution.
Critics also pointed to his historical record, alleging that he favoured higher rates during Democratic administrations but has become more dovish under Republican leadership.
US Senator Ruben Gallego cited reporting from the Wall Street Journal (WSJ), which claimed the President had previously urged Warsh to reduce borrowing costs. Warsh responded by stating that such reports were based on inaccurate sources and reiterated that the independence of the Fed is “essential” for economic stability.
Despite Trump’s backing, the nomination also faces a critical roadblock within the Republican Party.
US Senator Thom Tillis, a Republican from North Carolina, reiterated his refusal to support Warsh as long as a Department of Justice investigation into Jerome Powell continues.
The probe, led by Assistant US Attorney Jeannine Pirro, is examining whether Powell committed perjury during testimony last year regarding the budget of a Federal Reserve building renovation project.
Tillis and other Republican colleagues have expressed their support for Powell, arguing that the investigation is meritless. According to Tillis, he will not vote for a successor until the “investigation is dropped,” a stance that effectively freezes the nomination in a closely divided committee.
Federal prosecutors have reportedly continued their efforts to access Fed records as recently as last week, even after a judge previously found no evidence to support the charges.
The proceedings also delved into Warsh’s personal financial interests and the logistical challenges of a potential leadership transition.
US Senator Elizabeth Warren raised questions about the nominee’s investments in private entities, including SpaceX and Polymarket, noting that the specific size of these holdings had not been fully disclosed to the public.
Warsh defended his position by stating that the Office of Government Ethics has already approved his plan to divest all assets within 90 days of his confirmation.
Compounding the uncertainty is the unique situation involving Jerome Powell.
Unlike most departing Chairs, Powell has indicated he intends to remain on the Federal Reserve’s governing board until his separate term ends in 2028, or until the perjury investigation is concluded.
This could create an awkward power dynamic where the former Chair sits alongside his successor, a scenario not seen in Washington since the late 1940s.
While US President Donald Trump has threatened to remove Powell from the board entirely, legal experts suggest such a move would be difficult, particularly given recent US Supreme Court precedents relating to the protection of Fed governors from political dismissal.
WASHINGTON — President Trump’s nominee to chair the Federal Reserve said Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.
“The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”
Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, “I would.”
The comments underscore the challenge faced by Warsh, 56, a financier and former member of the Fed’s board of governors whom Trump named in January to replace the current Fed chair, Jerome H. Powell. Democrats on the committee accused Warsh of flip-flopping on interest rates over the years, supporting higher interest rates under Democratic presidents and advocating rate cuts during Trump’s time in office. Investors are watching the hearing closely to see how Warsh balances Trump’s demands with worsening inflation, as the war in Iran pushes up the price of gasoline.
Higher inflation typically leads the Fed to raise rates, or at least keep them unchanged, rather than cut them. When the Fed changes its key rate, it can affect mortgages, auto loans and business borrowing.
Yet Warsh’s account was challenged by Sen. Ruben Gallego, an Arizona Democrat, who said that Wall Street Journal reporting last year found that Trump had urged Warsh to reduce borrowing costs.
“Who’s lying here? Is it you or the president?” Gallego asked.
“I think those reporters need better sources,” Warsh responded.
For all the back and forth, the hearing didn’t appear to advance Warsh’s nomination, which has been delayed by a Justice Department investigation into the Fed and Powell, over brief testimony Powell gave last June before the same panel about a building renovation.
Sen. Thom Tillis, a North Carolina Republican on the committee, reiterated Tuesday he wouldn’t vote for Warsh until the investigation is dropped. With the committee closely divided and all Democrats opposed to his nomination, Tillis’ opposition is enough to bottle it up in committee.
“We have got to get rid of this investigation,” Tillis said, “so I can support your nomination.”
Tillis has previously said that all seven Republicans on the committee have signed a letter stating that Powell did not commit a crime when he testified before the panel last June. Federal prosecutors, led by U.S. Atty. Jeanine Pirro, are investigating his testimony for potential perjury, though a judge said last month they offered no evidence to support the charge when he threw out subpoenas Pirro had issued.
Prosecutors from her office as recently as last week sought access to the Fed’s building project but were turned away, revealing that the Trump administration has not reversed course despite opposition from members of his own party that are essential to Warsh’s confirmation.
In his opening remarks, Warsh told the Senate Banking Committee that one of his top goals would be to fight inflation, which remains elevated at 3.3% annually.
“Congress tasked the Fed with the mission to ensure price stability, without excuse or equivocation, argument or anguish,” Warsh said. “Inflation is a choice, and the Fed must take responsibility for it.”
Warsh would be in a tough spot if confirmed. Inflation is worsening, making it much harder for the Fed to implement the interest rate cuts Trump so desperately seeks. The conflict could also slow the economy, as well as hiring. And if Warsh ultimately becomes chair, he may very well find his predecessor, Powell, still sitting on the Fed’s governing board, an uncomfortable arrangement that hasn’t occurred since the late 1940s.
Warsh said the Fed’s political independence is “essential,” and that the central bank wasn’t threatened when “elected officials — presidents, senators, or members of the House — state their views on interest rates.” Trump has repeatedly urged Powell to cut the Fed’s key rate from its current level of about 3.6% to as low as 1%, a view almost no economist shares.
Sen. Elizabeth Warren, a Massachusetts Democrat, said that Trump has not just stated his opinions on rates, but has sought to fire a Fed governor and is investigating Powell.
“The Senate should not be aiding and abetting Donald Trump’s illegal takeover of the Fed by installing his chosen sock puppet as chair,” she said Tuesday.
Warren also noted that Warsh has not disclosed all of his financial holdings, which include investments in startups and private companies, or the size of those financial stakes. For example, Warsh has said he has holdings in SpaceX and Polymarket, but has not said how large those investments are.
Warren charged that Warsh is not in compliance with ethics requirements. Warsh argued that the Office of Government Ethics has signed off on his plan to sell all his assets within 90 days of his confirmation.
The turmoil could make a potential transition from Powell to Warsh an unusually turbulent one for the world’s most pivotal central bank, which has historically experienced smooth transfers of power. Should the change in leadership prove particularly bumpy, it could unnerve markets and lift longer-term interest rates.
Powell’s term as chair ends May 15. He said last month that he would remain as chair until a successor is named. Powell also is serving a separate term as a member of the Fed’s governing board that lasts until January 2028. Fed chairs typically leave the board when their terms as chair end, but Powell said last month he would remain on the board, even if a new chair is approved, until the investigation is dropped.
Trump said he would fire Powell if he attempted to remain at the Fed. Yet Trump’s previous attempt to remove a Fed governor, Lisa Cook, has been tied up in court. During oral arguments in January, a majority of justices on the Supreme Court appeared to lean toward leaving Cook at the Fed.
Rugaber writes for the Associated Press.
Kevin Warsh, United States President Donald Trump’s pick to lead the Federal Reserve, has addressed concerns about his independence pending his appointment to the bank amid fears that Trump could sway his decisions on monetary policy.
On Tuesday, Warsh — who served on the central bank’s Board of Governors from 2006 to 2011 — faced waves of criticism during a confirmation hearing of the Senate Banking Committee where Democrats voiced concerns about the Fed’s independence should he be appointed to lead the organisation.
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Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the committee, questioned Warsh’s independence, alleging that he would be a “sock puppet” for Trump, concerns he pushed back against and addressed in his opening testimony.
“I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators, or members of the House — state their views on interest rates,” Warsh said.
“Monetary policy independence is essential. Monetary policymakers must act in the nation’s interest . . . their decisions the product of analytic rigour, meaningful deliberation, and unclouded decision-making.”
Warsh, 56, also called for “regime change” at the US central bank, including a new approach for controlling inflation and a communications overhaul that may discourage his colleagues from saying too much about the direction of monetary policy.
Warsh blamed the central bank for an inflation surge after it slashed interest rates to nearly zero in the wake of the COVID-19 pandemic, a move that continues to hurt US households.
Concerned by the implications of artificial intelligence for jobs – expected to increase productivity – and prices, he said he would move quickly to see if new data tools could provide better insight on inflation, and would also discourage policymakers from saying too much about where interest rates might be heading.
“What the Fed needs are reforms to its frameworks and reforms to its communications,” the former Fed governor said. “Too many Fed officials opine about where interest rates should be … That is quite unhelpful.”
Warsh has also long been an advocate for shrinking the Fed’s $6.7 trillion balance sheet. In the Tuesday hearing, he said any such plans would take time and must be publicly discussed well in advance.
Jai Kedia, a research fellow at the Center for Monetary and Financial Alternatives at the libertarian Cato Institute, told Al Jazeera that there were many “encouraging” signs in Warsh’s candidacy.
“Warsh is presenting himself as a regime change candidate at a time when the Fed needs serious reform,” Kedia noted. “Particularly encouraging was his understanding of the negative effects of QE and his focus on reducing the balance sheet. He also correctly criticised mission creep and acknowledged that the Fed did better when it kept its focus on the dual mandate [of keeping inflation at 2 percent and increasing employment].”
Quantitative easing or QE is an unconventional monetary policy under which a central bank lowers interest rates, among other measures, to boost the economy, a step taken by central banks in several developed countries during the pandemic.
Warsh’s private investments, at well over $100m, are also under scrutiny. Among them are two holdings in the Juggernaut Fund LP, apparently part of his work advising for the Duquesne Family Office, the private investment firm of Stanley Druckenmiller.
Warsh’s nearly 70-page financial disclosure also showed that his other holdings include investments in Elon Musk’s SpaceX and the prediction trading platform Polymarket.
“I agreed to divest virtually all of my financial assets, the large majority of which will be divested” before taking office, Warsh said without giving any details.
Warsh noted that selling his holdings comes with challenges. He said that when that process is completed, he would have “virtually no financial assets” and “we’ll be sitting in something like cash”.
Warren, however, questioned him about the divestment plan. “Do we have any way to verify that, in fact, these sales will occur if we have no idea what’s in them?” she asked.
The hearing quickly turned contentious, and the pace of Warsh’s confirmation process through the Senate remained in doubt.
He would not directly say that Trump lost the 2020 election – a statement of fact that Senator Warren said was a litmus test of Warsh’s independence from the Republican president who nominated him for the top Fed job.
Yet even amidst the focus on independence, Warsh needs 13 votes to clear the 24-member Senate Banking Committee.
North Carolina Senator Thom Tillis said he would vote against Trump’s nominee and join Democrats, which would create a 12–12 split. The committee has 13 Republican members and 11 Democrats.
Tillis said he would not vote for any Trump nominee until an investigation into current Fed Governor Jerome Powell, whose term ends May 15, is either concluded or called off. Last month, federal prosecutors said they found no evidence of wrongdoing. But Jeanine Pirro, the US Attorney for the District of Columbia, has not indicated that the investigation will be dropped.
Tillis said on Tuesday that he would support Warsh’s nomination once the probe into Powell is dropped.
“Today’s confirmation hearing underscored that Warsh is aiming for independence with guardrails,” noted Selma Hepp, chief Economist of Cotality, a market analytics company. “He rejected being a political ‘sock puppet’ and argued the Fed protects its autonomy by ‘staying in its lane.’ He offered no pre-commitment on rates, while emphasising inflation discipline, a large balance sheet, and a desire for clearer Fed communication.”
Noel Dixon, senior macro strategist at State Street, said that with Warsh, the US would have a “dovish-leaning Fed”.
“When a senator asked him if he would lower rates to 1 percent – I guess Trump had indicated that he would like to have rates below 2 percent – Warsh didn’t really say no to that,” Dixon noted. “He didn’t say that it would increase prices. He kind of leaned on it and said there would be a lagged effect, and he was just very noncommittal to that. So it’s almost like – just reading between the lines – he’s giving himself space to maintain possible justification for rate cuts by the end of the year.”
Trump has continued to pressure the central bank.
On Tuesday, he said he would be “disappointed” if the Fed did not lower interest rates.
Tuesday’s remarks follow comments in December, when the US president said he would not appoint anyone to lead the central bank unless they agreed with him.
“The public needs to know whether Mr. Warsh will have the courage of his convictions or if he’s willing to compromise his independence and accommodate more Wall Street deregulation,” Graham Steele, an academic fellow at the Rock Center for Corporate Governance at Stanford University, told Al Jazeera in an email.
Warsh has praised the administration for its push for increased bank deregulation. In a November 2025 op-ed for the Wall Street Journal, Warsh claimed that Trump’s “deregulatory agenda” is “the most significant since President Ronald Reagan’s”.
WASHINGTON — Federal prosecutors made an unannounced visit this week to a construction site at Federal Reserve headquarters that is the focus of an investigation into a $2.5-billion renovation project, according to two people familiar with the visit.
Two prosecutors and an investigator from U.S. Atty. Jeanine Pirro’s office were turned away on Tuesday by a building contractor and referred to Fed attorneys, one of the people said. The two people familiar with the visit spoke on condition of anonymity because they weren’t authorized to publicly discuss an ongoing investigation.
The visit underscores that the Trump administration is not backing down from its investigation of the Fed and its chair, Jerome Powell, even though the probe has delayed the confirmation of a new chair nominated by President Trump. The investigation is focused on cost overruns and brief testimony about the project last summer by Powell. Trump confirmed in an interview that aired Wednesday on Fox Business that he wants to continue the probe.
Last month, during a closed-door hearing before a federal judge, a top deputy from Pirro’s office conceded that they hadn’t found any evidence of a crime in their investigation of the headquarters project.
Robert Hur, an attorney for the Federal Reserve board of governors, sent an email to Pirro’s prosecutors about their visit and their request for a “tour” to “check on progress” at the construction site. Hur’s email, which the Associated Press has viewed, noted that U.S. District Judge James Boasberg concluded that their interest in the Federal Reserve’s renovation project was “pretextual.”
“Should you wish to challenge that finding, the courts provide an avenue for you; it is not appropriate for you to try to circumvent it,” Hur wrote.
Sen. Thom Tillis, a North Carolina Republican who is a key member of the Senate Banking Committee, has vowed to vote against Kevin Warsh, Trump’s nominee to replace Powell as Fed chair, until the investigation is dropped. With the committee closely divided on partisan lines, Tillis’ opposition is enough to block Warsh.
The Banking panel said Tuesday that it will hold a hearing on Warsh’s nomination April 21. Powell’s term as Fed chair ends May 15, but Powell said last month he would remain as chair until a replacement is named.
Powell is serving a separate term as a member of the Fed’s governing board that lasts until January 2028. Chairs typically leave their posts as governor when their terms as chair end, but they can remain on the board if they choose.
Last month, Powell said, “I have no intention of leaving the Board until the investigation is well and truly over, with transparency and finality.” If he remains in his seat, even after Warsh is confirmed, it would deny Trump the oppotunity to fill a seat on the seven-member board.
Late Tuesday, Tillis posted a link on social media to the Wall Street Journal’s article on the visit below an image of the Three Stooges and wrote, “The U.S. Attorney’s Office for D.C. at the crime scene.”
The investigation by Pirro’s office centers on an appearance by Powell before the Senate Banking Committee last June, when he was asked about cost overruns on the Fed’s extensive building renovations. The most recent estimates from the Fed suggest the current estimated cost of $2.5 billion is about $600 million higher than a 2022 estimate of $1.9 billion.
“It is probably corrupt, but what it really is, is incompetent,” Trump said on Fox Business. “Don’t you think we have to find out what happened there?”
The president’s support for the investigation threatens a time frame set out by Sen. Tim Scott, a South Carolina Republican who chairs the Banking Committee. Scott said Tuesday on Fox Business that he believed the investigation would be “wrapped up in the next few weeks,” allowing Warsh to be confirmed soon after.
News of the unannounced visit by prosecutors comes as Trump has again threatened to fire Powell, if the Federal Reserve chair decides to stay on the central bank’s governing board after his term as chair expires next month.
“Well then I’ll have to fire him, OK?” Trump said when reminded that Powell has said he won’t leave the Fed while the Justice Department investigates a $2.5-billion renovation project at the bank. Powell has also said he will remain as chair of the Fed’s rate-setting committee until a replacement is confirmed by the Senate, following the precedent of previous chairs.
Trump has for months wanted to remove Powell as chair of the Fed, saying he has been too slow in orchestrating interest rate cuts that would give the U.S. economy a quick boost. Powell has said the investigation is a pretext to undermine the Fed’s independence to set rates.
Trump’s threat to fire Powell comes as the Supreme Court is weighing the president’s effort to remove another central bank governor, Lisa Cook. Lower courts have so far allowed Cook to remain in her job while her legal challenge to the firing continues. The Supreme Court also seemed likely to keep her on the Fed when the court heard arguments in January. A decision could come any time.
The issue in Cook’s case is whether allegations of mortgage fraud, which she has denied, is a sufficient reason to fire her or a mere pretext masking Trump’s desire to exert more control over U.S. interest rate policy.
The Supreme Court has allowed the firings of the heads of other governmental agencies at the president’s discretion, with no claim that they did anything wrong, while also signaling that it is approaching the independence of the nation’s central bank more cautiously, calling the Fed “a uniquely structured, quasi-private entity.”
Kunzelman and Rugaber write for the Associated Press. AP Writer Mark Sherman contributed to this report.