The new chairman of the Federal Reserve is already expected to have a tough time following through on one of Trump's main demands, according to the Wall Street Journal.
Trump tapped Kevin Warsh to replace Jerome Powell in January, but the economy back then looked a lot different, the Journal noted. What hasn't changed is Trump's expectation for lower interest rates, even bringing it up on Friday.
However, recent job reports and inflation are causing economists who pushed for interest rate hikes to move in a more cautious direction and to keep rates steady, per the Journal.
“The U.S. labor market has kicked into a higher gear,” Neil Dutta of Renaissance Macro Research told clients in a Friday note, according to the Journal.
The Journal warned, "The labor-market rebound is setting in motion a collision between the new Fed chair, the bond market and the White House."
President Donald Trump's pick for Fed chair Kevin Warsh was confirmed by the Senate on Wednesday in a 54-45 vote, the most divisive confirmation in the modern era — but that might not be enough for Trump, especially as the Iran war has sent prices soaring in the United States and inflation skyrocketing as economists expect interest rate cuts to be put off.
Warsh was the only Fed chair nominee in modern history to receive nearly zero bipartisan support, with Pennsylvania Democrat Sen. John Fetterman the sole Democrat to cross party lines to vote for him. That vote came the same day Fetterman cast the deciding vote against a war powers resolution to end Trump's Iran war.
In an unusual break with tradition, outgoing chair Jerome Powell will remain on the Fed's governing board after stepping down, determined, sources said, to safeguard the institution from political pressure.
"Those projections further pad the protective bubble that some Republicans have built around Warsh in recent weeks, giving him rhetorical runway to hold off on the cheaper borrowing costs that Trump has pushed for," according to Semafor.
But that runway may be short-lived as Trump and Republicans face mounting pressure ahead of the midterm elections.
"Warsh's honeymoon may not last long after senators cast their final votes to install him as chair," according to Semafor.
"The president has 'put this guy in for a firing squad,'" Access/Macro chief economist Tim Mahedy told Semafor. "It's going to be brutal — Trump's going to turn on [Warsh] in two months."
Eyes are back on the Republican senator who split from Trump's attack on Federal Reserve Chairman Jerome Powell after the president said he's not giving up just yet.
"Now the burden shifts back to Thom Tillis to continue opposing Kevin Warsh's confirmation indefinitely," the X account Rogue POTUS staff wrote, "or to cave."
Sen. Tillis, R-NC, broke from Trump's attempt to replace Powell with Kevin Warsh. Despite supporting Warsh's credentials, Tillis said he would refuse to confirm Warsh unless Trump drops his investigation into Powell, as the senior GOP senator didn't want to set a precedent for removing dissenting Fed chairs.
U.S. Attorney for the District of Columbia Jeanine Pirro announced that the investigation was "closed" on Friday, but Trump contradicted his cabinet member the next day, saying "it's not closed."
Observers began alerting Tillis by mentioning him x. "Just inviting @SenThomTillis to dig in his heels," political columnist Jonathan Martin wrote.
"All that matters is whether Tillis cares," columnist Conor Sen added.
"Ur move @SenThomTillis," political strategist TJ Adams-Falconer posted alongside a GIF of how Tillis might be reacting.
President Donald Trump won nothing from his attempt to investigate and intimidate departing Federal Reserve chairman Jerome Powell, Washington insiders said.
The Department of Justice is ditching its overblown criminal probe into overspending on renovations to Federal Reserve buildings. Punchbowl News reported that Trump didn't get anything out of his attack on Powell, who has long resisted Trump's call to lower interest rates to bail out a struggling economy.
"The DOJ’s exercise here resulted in zero political upside for Trump — just a singular, stinging failure," the Friday article reads. "Having a new Fed chair will be a nice perk, but the investigation was nothing but a headache for anyone involved."
U.S. Attorney General Jeanine Pirro announced that "I have directed my office to close our investigation" into Powell, adding that her office "has the authority to hold the Federal Reserve accountable." Powell's term ends on May 15.
The move backfired, the article argued, as Sen. Thom Tillis (R-NC) came out in opposition to Kevin Warsh, Trump's pick to replace the Fed chairman, because of the probe. Tillis' standoff as proof that the Senate "still has leverage over the White House," Punchbowl reports wrote.
Pirro said in a statement that the DOJ “will not hesitate to restart a criminal investigation." Sen. Elizabeth Warren, (D-MA) acknowledged the threat and said in a statement that, “Anyone who believes Donald Trump’s corrupt scheme to take over the Fed is over is fooling themselves,” Warren said in a statement.
Punchbowl concluded, "If there’s a lesson for the Senate here, it’s this: The chamber still has leverage over the White House."
A GOP senator said he would like to vote to confirm the nominated chairman of the U.S. Federal Reserve, Kevin Warsh, but demanded the Department of Justice first back off.
Republican Sen. Thom Tillis (R-NC) told Warsh during his confirmation hearing on Tuesday that "the only thing I’ve found the least bit odd about you is you’ve never watched an episode of Seinfeld," but he can't vote to approve the Trump appointee because of a DOJ "investigation" into current Fed Chairman Jerome Powell.
"The problem that I have here is that we had some U.S. attorney with a dream or assistant U.S. attorney thinking it would be cute to bring Chair Powell under an investigation just a few months before the position was going to be open," Tillis said. "We have got to end this investigation. Big DOJ didn’t know about it, the president didn’t know about it, let’s get rid of this investigation so I can support your confirmation. Mr. Warsh."
The Federal Reserve has faced GOP scrutiny recently for the increased cost of renovating buildings in Washington, D.C. Tillis mentioned the Martin, Eccles and East buildings, which are all part of the Fed's D.C. campus. Tillis defended the increased costs at the hearing by noting that price estimates went up by 69 percent because "asbestos was identified. Remediation was required. Pylons had to be built underneath the building."
Trump has pressed for an investigation, but the DOJ has said it doesn't have evidence of misconduct by Powell, nor has it publicly said it has an ongoing investigation.
"If we put everybody in prison in federal government that had had a budget go over, we’d have to reserve an area roughly the size of Texas for a penal colony because of the way government projects work," Tillis argued, adding that the Fed's increased costs are "not acceptable, unfortunate, but legitimate."
More to the point for Tillis, he doesn't want to approve Warsh out of fear that it will empower anyone at the Fed with an axe to grind.
“It sets a precedent that lets somebody in the bowels of DOJ determine who to put pressure on,” the Wall Street Journal quoted Tillis saying after the hearing. “If this investigation, which, on its face, looks bogus, wasn't happening, we’d be voting to send Mr. Warsh out of committee next week or the week after.”
Sen. Elizabeth Warren (D-MA) tore into President Donald Trump's nominee for Federal Reserve chairman Kevin Warsh during a confirmation hearing at the Senate Banking Committee on Tuesday.
The ranking member criticized Trump, calling out his attacks on the independence of the Federal Reserve and its officials. Warren argued that the economy has suffered under the president's leadership and that this was his last chance to try and take control as the midterms approach this fall.
"The president has repeatedly and illegally attempted to take over the Fed," Warren said. "His bogus attacks on Governor Lisa Cook and Chair [Jerome] Powell were designed to threaten all the members of the Fed to do Trump's bidding and open more spots for Trump flunkies. Why try to end the independence of the Fed? Because Trump's economic failures are causing him political problems, and he wants the Fed to use monetary policies to artificially juice the economy in the short term. And this is his last chance to do that before the November elections."
Warren described her concerns over approving Warsh's nomination, including his role during the financial crisis.
"Warshtook on the job of Wall Street's personal liaison onthe Fed board," she said. "He was quick torespond to concerns from Wall Street CEOs, and he workedtirelessly to arrangemultibillion dollar bailouts forthem with nothing for Americanfamilies. No regrets, he says.No regrets after the crash, mostpeople on the Fed saw millionsof Americans unemployed, peoplewho had lost their homes, andsaid now might be a good timeto lower rates and make the costof borrowing cheaper forbusinesses to avoid more layoffsand make it cheaper for Americans who are worried aboutpaying their mortgages or theircredit cards. But not Mr. Warsh. Nope. He wanted to keep interestrates high, and he sang the samesong for more than a decade,even as the economy struggledwhen the job of Fed chair becameavailable during Trump's firstterm as president, Warsh held onto his high interest rateinflation."
She said that once passed on nominating Warsh during his first term, that was when Warsh decided to call for the Fed to pause interest rates hikes. And in fall of 2024, she said Warsh "flipped again" and "was even criticizing the Fedfor cutting rates."
"But as soon as Donald Trump became president a secondtime, Warsh reversed himselfonce more and began shoutingfrom the rooftops about how the Fed should cut interest rates," Warren said.
"Evidently, he learned his lessonthis time around. He sucked upto Donald Trump to snag hisdream job. Mr. Chairman, lastweek, every single Democraticmember of this committee askedthat you postpone this hearingand instead conduct oversight onthe president's role indirecting bogus criminal probesinto Chair Powell and Governor Cook," she added. "The Senate should not beaiding and abetting Donald Trump's illegal takeover of the Fed by installing his chosensock puppet as chair. It's aninvitation for corruption andfor economic catastrophe. Wehave the power to stop it, andwe should be using that power."
Tillis, who plans to not seek reelection and will end his term in January 2027, responded after a federal judge rejected U.S. Attorney Jeanine Pirro's subpoenas targeting Fed Chair Jerome Powell. U.S. District Judge James Boasberg granted the order, agreeing with the Fed that Trump's repeated attacks on the chairman indicate the investigation into the Federal Reserve's building renovation was pretextual and politically motivated.
Neil Irwin, Axios chief economic correspondent spoke during a live interview on MS NOW Friday and called Boasberg's decision a "resounding defeat" for Trump and his Department of Justice.
Tillis has been critical of the Trump administration, including now demoted Homeland Security Secretary Kristi Noem. During a congressional hearing this month, Tillis vowed not to confirm any Trump nominees just as the administration was pushing to confirm Kevin Warsh, who was nominated to be the next chairman of the Federal Reserve. Powell's term ends on May 23.
"Here's a warning from Thom Tillis, senator from North Carolina, who had threatened toblock Kevin Warsh because ofthis lawsuit," MS HOW host Katy Tur said.
"He says theruling to block subpoenasagainst Powell confirms justhow weak and frivolous theinvestigation," Tur added. "And he's nowwarned the DOJ againstappealing the ruling, saying itwill only delay theconfirmation of Kevin Warsh asthe next Fed chair. So he'ssaying, Justin, 'If you guys delaythis, I'm going to dig in myheels and I'm not going toconfirm your next guy.'"
