Senator Thom Tillis announced he is lifting his hold on President Donald Trump’s nominee for Federal Reserve chair, Kevin Warsh, after the Justice Department ended its investigation into current chair Jerome Powell. This decision clears the path for Warsh’s expected confirmation by the Senate.
The Justice Department recently concluded its probe into Jerome Powell, which focused on alleged overspending related to renovations at the Federal Reserve headquarters. Following this development, Tillis indicated his intention to support Warsh and allow the nomination process to proceed, referencing assurances received from the DOJ regarding the independence of the central bank.
With the Senate Banking Committee slated to vote on Warsh’s nomination on Wednesday, approval is all but certain given its composition of 13 Republicans and 11 Democrats. Tillis’s support removes the risk of a stalemate that could have blocked Warsh’s advancement to the full Senate for confirmation.
During his confirmation hearing last week, Warsh outlined an agenda for significant changes at the Federal Reserve, including revising how inflation is measured and communicated. He criticized the central bank’s preferred inflation measure, the Personal Consumption Expenditures index, as insufficient by itself and advocated for using trimmed averages, which exclude extreme data points to provide a clearer picture of price trends.
Meanwhile, several economists, including former Cleveland Fed president Loretta Mester, have pointed out that trimmed measures can have a downward bias, urging caution in their use during periods of volatile prices.
In addition to his focus on inflation, Warsh said he intends to pursue a reduction of the Fed’s balance sheet, arguing this approach would help lower interest rates and contain inflation. However, such policy changes would require consensus among members of the Federal Open Market Committee.
Powell, who can continue to serve as a board member until 2028, has indicated his intention to remain even after stepping down as chair. His future plans could be a subject of questions at the Fed’s next press conference.
