Trump's Federal Reserve nominee to face tough hearing before Senate
panel
[April 21, 2026]
By CHRISTOPHER RUGABER
WASHINGTON (AP) — Kevin Warsh is taking another step toward his
decade-long goal of winning the top job at the Federal Reserve by
appearing at a hearing before the Senate Banking Committee on Tuesday.
But the role that he may eventually assume could turn out vastly
different than what he expected.
Inflation is worsening as the Iran war has spiked gas prices, making it
much harder for the Fed to implement the interest rate cuts President
Donald 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, Jerome Powell, still sitting on the
Fed’s governing board, an uncomfortable arrangement that hasn’t occurred
since the late 1940s.
Warsh, a former top official at the Fed and a wealthy investor, will
likely face a range of tough questions at the hearing. Democrats on the
committee have already signaled they will press him about what they
argue is a lack of transparency regarding some of his vast financial
holdings, which total more than $100 million, according to a recent
disclosure.
Another top issue will be Trump's repeated demands for cuts in the Fed's
short-term interest rate, which has created the perception that Warsh
was nominated to do the president's bidding. Most other Fed officials
have said they support keeping the central bank's key rate unchanged,
now that inflation has begun to rise again.
Warsh expressed support for the Federal Reserve's independence in
written remarks released Monday that he will deliver at the hearing.
He said such political independence is “essential,” but he also said it
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%.
Warsh also underscored his commitment to one of the Fed's two
congressional mandates: Keeping inflation low. He did not mention the
other, which is pursuing maximum employment.
“Inflation is a choice, and the Fed must take responsibility for it,”
Warsh said in his prepared remarks. A tight focus on inflation typically
leads officials to keep interest rates high to cool spending, rather
than reducing rates to boost the economy, as Trump has demanded.
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Kevin Warsh speaks to the media about his report on
transparency at the Bank of England, in London, Dec., 11, 2014. (AP
Photo/Alastair Grant, Pool, File)
While the long-delayed hearing is a necessary step for Warsh, it's not
clear when the committee may even be able to vote on his nomination. The
Justice Department is investigating Powell and the Fed over a building
renovation, and Sen. Thom Tillis, a North Carolina Republican, has said
he would effectively block Warsh until the probe is dropped.
“Clearly there’s a majority of the committee that’s not going to move
this nomination forward, especially while this sham of a criminal
investigation is going on,” Sen. Tina Smith, a Democrat from Minnesota,
told reporters on a conference call Monday. “It feels a bit like we’re
going through the motions when we really have not addressed the
fundamental challenges that this nomination has.”
The turmoil could make a potential transition from Powell to Warsh an
unusually turbulent one for the world’s most important central bank,
which has typically seen 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 also said last month he would remain on the board,
even if a new chair is approved, until the investigation is dropped.
When asked about Powell's comments, Trump said he would fire Powell if
he tried to stay at the Fed. Yet Trump's previous attempt to remove a
Fed governor, Lisa Cook, has been tied up in courts. During oral
arguments in January, a majority of justices on the Supreme Court
appeared to lean toward letting Cook keep her job.
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