New Fed Chair? Not So Fast
Since yesterday, we know who will probably replace current Fed Chair Jerome Powell: Kevin Warsh, who has been nominated by President Trump.
The 55-year-old is far from new to the game. He served on the Fed’s Board of Governors from 2006 to 2011, becoming the youngest Fed governor at the time under President George W. Bush. Warsh is married to Jane Lauder, an heir to the Estée Lauder cosmetics fortune. His father-in-law, Ronald Lauder, is a longtime Republican donor and a close associate of Donald Trump.
But why did I say “will probably replace”?
Because Warsh still has to be confirmed by the U.S. Senate after a hearing in the Senate Banking Committee. And Republicans hold only a narrow majority: 53 out of 100 seats. Confirmation requires 51 votes.
Here’s where it gets tricky. Sen. Thom Tillis, a key Republican on the Banking Committee, has publicly said he will block any Fed chair nomination until an ongoing investigation involving the current Fed chair is resolved. If the Banking Committee does not vote in favor — and if just two more Republican senators withhold their support, Warsh could be in trouble. Democrats will almost certainly oppose him anyway, citing concerns over central bank independence and political pressure.
And even if Warsh makes it through and gets appointed, it’s important to remember: the Fed Chair doesn’t decide interest rates alone. Rate decisions are made by the FOMC (Federal Open Market Committee), and you need 7 out of 12 votes. The Fed Chair is just one of those votes. On top of that, it’s still unclear whether Powell would resign from the Board, his term as a governor runs until 2028. That means a scenario where Chair Warsh could still face Governor Powell voting against him.
Guys, these are exciting times. The rise in gold and silver prices over the past months looks like a clear sign that investors are hedging against a weaker dollar and growing uncertainty about the future direction of the U.S. central bank.
I personally think Warsh will get the job in the end, but the real question is whether he’ll actually be able to push Trump’s agenda through, especially when it comes to meaningful rate cuts.
