WASHINGTON — Kevin Warsh will officially take the lead at the Federal Reserve after U.S. senators voted Wednesday to confirm the economist and former central bank governor to replace Chair Jerome Powell.

Senators approved Warsh 54-45 nearly along party lines. Democratic Sen. John Fetterman, D-Pa., broke ranks with his party to join Republicans in support of Warsh’s nomination. Sen. Kirsten Gillibrand, D-N.Y., did not vote.

Warsh, of Florida, takes the helm after President Donald Trump spent most of his second term haranguing and threatening to fire Powell if he did not lower interest rates.

Trump is also tangled in litigation over his firing last summer of Fed Governor Lisa Cook. The U.S. Supreme Court is currently reviewing whether Trump’s dismissal of Cook exceeded his presidential authority.

Dropped investigation

Trump’s ire for Powell escalated into a Department of Justice investigation in January that even angered some in Trump’s own party.

Sen. Thom Tillis, R-N.C., who sits on the narrowly divided Senate Committee on Banking, House and Urban Affairs, withheld his support for Warsh’s nomination until the administration dropped its probe into Powell’s handling of a multiyear renovation of the Fed’s Washington, D.C., headquarters.

The U.S. attorney’s office for the District of Columbia scrapped the investigation on April 24, but said the Fed’s inspector general would continue to examine cost overruns. The administration had accused Powell of lying to Congress about the price of renovations.

A federal judge dismissed DOJ’s criminal subpoenas into the Fed and Powell in March, citing in his order “abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair.”

Powell’s term as chair expires Friday. He will stay on as a sitting governor on the central bank’s board.

Democratic critique 

Sen. Chris Van Hollen, D-Md., criticized Warsh on the Senate floor ahead of Wednesday’s vote. Van Hollen said Warsh has done a “180-degree flip” on inflation since his time of arguing for higher interest rates as a Fed board governor during the 2008 financial crisis. The Maryland senator said Warsh is now a “super dove on interest rates.”

“Markets need confidence that monetary policy decisions are being made on the basis of economic evidence, not on the basis of political pressure or convenience,” Van Hollen said.

“That is especially important now, as prices are rising too fast and President Trump is still demanding a big cut in interest rates,” he added.

Inflation data released Tuesday showed a 3.8% increase year over year, the highest jump since 2023.

WASHINGTON — President Donald Trump’s pick to lead the Federal Reserve was one step closer to the job Wednesday after North Carolina Republican U.S. Sen. Thom Tillis cast the deciding vote to advance Kevin Warsh’s nomination to the full Senate.

Lawmakers on the Senate Committee on Banking, Housing and Urban Affairs voted 13-11 along party lines to move Warsh to the next step.

The potential turnover at the top of the Fed, which sets monetary policy, comes as Americans see higher costs hit their pocketbooks, particularly soaring prices at the gas pump, as the U.S.-Iran conflict disrupts worldwide energy supplies.

Tillis had withheld his support until the Trump administration announced Friday it would drop what the senator described as a “bogus” investigation of current Fed Chair Jerome Powell.

“It’s no secret that the reason that Mr. Warsh’s nomination could have been held up is because of my concern with the investigation. I want to thank the Department of Justice for the assurances that they gave me,” Tillis, R-N.C., said following the panel’s brief morning session that lasted just under 15 minutes.

“The fact of the matter is, this was based on two minutes of testimony. It was not criminal,” Tillis said of the DOJ’s probe into Powell’s June 2025 testimony to Congress on a major $2.5 billion renovation of the Fed’s Washington, D.C., headquarters.

The committee vote comes after Trump’s sustained verbal attacks on Powell over several months, including numerous public threats to fire the Fed leader if he did not agree to lower interest rates. `

A federal judge last month blocked the administration’s subpoenas to probe the Fed and Powell, citing “a mountain of evidence” that Trump was using the investigation to force Powell’s hand.

The Fed was scheduled to meet Wednesday afternoon to deliver its latest decision on interest rates, possibly the last under Powell, whose term expires May 15.

Inflation, affordability

The committee’s top Democrat, Sen. Elizabeth Warren of Massachusetts, said the vote brings Trump “one step closer to completing his illegal attempt to seize control of the Fed and to artificially juice the economy.” 

Inflation and affordability are emerging as major issues ahead of the 2026 midterm elections that will determine control of Congress. 

Sen. Raphael Warnock, D-Ga., said his constituents in Georgia and beyond “deserve to know that the Fed is on their side, maximizing their chances to keep a good paying job and keeping their lives affordable, not on the side of the president’s poll numbers or his political concerns as we approach the midterm.”

“Fed independence is not theoretical. It matters to the everyday lives of working families,” Warnock said.

According to a Reuters/Ipsos poll taken between April 24-27, 61% of Americans think the U.S. economy is on the wrong track. 

When asked about the costs and benefits of the war in Iran, only a quarter of respondents said they agreed the U.S. military operation was worth it, according to the Ipsos poll.

Americans have watched fuel prices climb in March and April after Iran retaliated against the U.S.-Israeli attacks by choking off the Strait of Hormuz, a narrow maritime passageway where, prior to the war, one-fifth of the world’s petroleum passed.

Gas prices climb

The average price across the U.S. for a gallon of regular gas reached $4.23 Wednesday, not only the highest price point since the U.S. launched operations in Iran on Feb. 28, but also the highest since July 2022, according to GasBuddy.  

Prior to the war, a gallon of regular hadn’t topped $3 all year.

A return to normal, free flow in the strait — which was about 140 vessels per day pre-war — appears out of reach at the moment, as Trump announced last weekend his negotiators pulled back again on attending talks in Islamabad.

Secretary of Defense Pete Hegseth sidestepped a question Wednesday regarding how much longer the war might last, asked by Rep. Chrissy Houlahan, D-Pa., before the House Armed Services Committee.

During the same hearing however, the Pentagon’s Jules Hurst III, acting undersecretary of war who oversees finances, did reveal the war had so far cost the U.S. $25 billion.

While the Fed’s inflation target is 2%, data released at the beginning of April showed prices for all items rose 3.3% over a year ago. The jump was largely driven by a 21% spike in fuel prices from February to March.

The Fed’s so-called “dual mandate” is to maximize employment and stabilize prices. The Fed primarily loosens or tightens the economy by adjusting interest rates — lowering them if the economy lags and inflation is too low, and raising them when inflation becomes too high.

Lisa Cook firing

Warren and Warnock also noted Trump’s ousting in August of Fed Governor Lisa Cook, appointed to the board by former President Joe Biden. The U.S. Supreme Court is reviewing whether Trump exceeded his authority in firing Cook.

Warnock said he was dissatisfied with Warsh’s written responses to additional questions sent after his April 21 nomination hearing before the committee.

“I asked, quote: ‘If President Trump, or any future president, attempts to unlawfully fire you without cause, would you leave the Federal Reserve?’ His response, quote: ‘I will not answer hypothetical questions of this nature,’” Warnock recounted.

“Well, this isn’t a hypothetical question. In fact, the president attempted to fire Governor Cook this in the past year, and the president has repeatedly mused about firing Chair Powell because he won’t bend to his interest rate demands — doing so as recently as two weeks ago,” Warnock said, referring to Trump’s comments during an April 15 Fox Business interview. 

Asked Wednesday afternoon if he thinks Warsh will persuade the Fed’s board of governors to lower interest rates, Trump told reporters, “They should because it’s a good time to lower them. We’re the most prime country anywhere in the world.”

Powell also faced questions Wednesday afternoon.

When asked whether he expects Warsh will remain independent of Trump, Powell said, “He testified very strongly to that effect in his hearing, and I’ll take him at his word.”

Jennifer Shutt contributed to this report.