Senate confirms Warsh to Fed Board, with Fed chair vote likely Wednesday

By Richard Cowan and Ann Saphir

May ‌12 (Reuters) - The U.S. ​Senate on ​Tuesday confirmed Kevin Warsh to a 14-year term as Federal Reserve governor, marking an important step toward his succeeding Jerome Powell as the U.S. central bank's next ‌leader.

Here are some details and context:

• The vote passed 51-45, with a single ⁠Democrat, John Fetterman of Pennsylvania, casting his vote with the Republican majority.

• The Senate also approved the start of a ‌30-hour countdown that allows a vote ‌to approve Warsh for a concurrent four-year term as Fed chair as soon as Wednesday. Powell's term as chair ends on Friday.

• A lawyer, financier and former Fed governor, Warsh is ​on course to lead the Fed at a time when the central bank's political independence is being tested by pressure from the administration to deliver the interest-rate cuts demanded by President ⁠Donald Trump.

• Trump's unprecedented efforts to exert control over the Fed include the attempted firing of Fed Governor Lisa Cook in a ​case now before the Supreme Court and support for a Department of Justice investigation into Powell's management of a building renovation that a federal judge ruled was ​pretext for pressuring Powell to cut rates or resign.

• The ‌DOJ dropped its investigation, but its lead prosecutor in Washington says she could reopen it.

• Powell plans to take the unusual step of staying on ⁠as governor after his chair term ends, in response to the "series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors."

• Warsh says he plans "regime change" at the Fed, ⁠including tightening its coordination with the Treasury Department and the Trump administration on non-monetary policies and setting it on ​course for a smaller balance sheet, which he argues should allow for a lower policy rate.

• A surge in oil prices since the start of the Iran war has pushed up inflation and pared investor expectations for ‌an interest-rate cut this year. Currently financial markets are pricing about a one-in-three chance of a rate hike by December. The Fed's current target range ‌for short-term borrowing costs is 3.50%-3.75%.

• The Fed chair has one of 12 votes on the interest-rate-setting Federal Open ⁠Market Committee and is one of 19 ‌voices at the policy-setting table.

• ​The Fed's next meeting, likely its first chaired by Warsh, is scheduled for June 16-17.

(Reporting by Richard Cowan, Writing by Ann Saphir; Editing by Dan Burns and ‌Andrea Ricci )

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