US Senate Approves Kavin Warsh as 17th Federal Reserve Chair

Washington DC. The US Senate has approved Kavin Warsh as the 17th Chairman of the US Central Bank Federal Reserve (Fed). On Wednesday, the Senate passed his name for Fed Chairman by a narrow margin. He will now take over the Fed's responsibilities in place of Jerome Powell. Powell's eight-year tenure was marked by economic crisis and intense clashes with the White House.

In the Senate vote, Warsh received 54 votes in favor and 45 against. The vote remained largely along party lines, with only Pennsylvania Democrat Senator John Fetterman siding with the Republicans in supporting Warsh. This is considered the most partisan vote for Fed Chairman in American history.

Warsh is considered close to President Donald Trump. Trump has long demanded interest rate cuts. However, by the time Warsh takes office, inflation is soaring due to tensions between the US-Israel and Iran. According to the recently released Consumer Price Index (CPI), inflation in April reached its highest level in three years, surpassing wage growth.

The rise in fuel prices due to the Iran war is complicating hopes for rapid interest rate cuts. Investors now expect the Fed to keep its benchmark lending rate unchanged for the rest of the year or even raise rates if inflation increases. This is likely to disappoint Trump.

If this happens, Trump may vent his anger on Warsh, just as he did on Powell. Trump had joked earlier this year that if Warsh did not lower interest rates after becoming Fed Chairman, he would sue Warsh.