Overview
- Kevin Warsh advanced out of the Senate Banking Committee, with a floor vote expected before Jerome Powell’s term ends on May 15.
- In his confirmation hearing, Warsh backed a strict 2% inflation goal and said he would end public guidance on future policy, including the FOMC “dot plot” of rate forecasts.
- He said the Federal Reserve should shrink its more than $6 trillion bond portfolio and rely on interest rates, a change that could lift Treasury yields as a major buyer steps back.
- Market watchers warn this stance would favor price stability over supporting asset prices, which could pressure growth stocks and weaken the long-held belief that the Fed will cushion sell-offs.
- The hearing exposed partisan divides as Republicans accepted his pledges of independence, Democrats questioned his White House ties, and he agreed to sell his financial holdings within 90 days if confirmed.