A key political obstacle to Kevin Warsh's appointment as Federal Reserve Chair has been removed, as North Carolina Republican Senator Thom Tillis announced on Sunday that he would withdraw his opposition to Warsh’s nomination. Tillis stated that he is "prepared to move forward with Warsh's confirmation process" after receiving assurances from the Department of Justice. The Senate Banking Committee’s nomination vote is scheduled for April 29, aligning closely with the expiration of Powell's term on May 15.
The biggest political obstacle to Kevin Warsh's appointment as the Federal Reserve Chairman has been removed, and his confirmation process is expected to advance rapidly this week.
According to Bloomberg, Thom Tillis, a Republican Senator from North Carolina and member of the Senate Banking Committee, announced on Sunday that he would withdraw his opposition to Warsh’s nomination, paving the way for the committee’s scheduled vote on April 29.
Previously, the Department of Justice announced the withdrawal of the criminal investigation into current Federal Reserve Chair Powell. Tillis stated that this decision eliminated his core concern regarding threats to the independence of the Federal Reserve.
Warsh enjoys broad support among Republican senators, and the Senate Banking Committee has scheduled the confirmation vote for April 29. If the committee approves the nomination, it will proceed to a full Senate vote, with widespread expectations that the final confirmation will align closely with Powell’s term expiration on May 15.
Once confirmed, Warsh may initiate sweeping reforms. During last week’s hearing, he called for the abolition of the "dot plot" and a reevaluation of forward guidance mechanisms, signaling a fundamental shift in the framework that has underpinned global asset pricing over the past 15 years, potentially leading to a comprehensive restructuring of pricing logic across equity, bond, and currency markets.
Tillis withdraws opposition; nomination vote scheduled for April 29
Tillis previously held a key vote on the Senate Banking Committee and explicitly pledged to block Warsh’s nomination as long as Powell remained under federal prosecution. He characterized this criminal investigation as an attack on the independence of the Federal Reserve, suggesting its intent was to pressure Powell into an early resignation.
On Friday, Jeanine Pirro, a federal prosecutor in Washington, D.C., announced on social media that she would drop the criminal investigation into cost overruns for the renovation of the Federal Reserve building and Powell’s congressional testimony, transferring the review to the Federal Reserve’s Office of Inspector General. Tillis subsequently communicated with the Department of Justice and received assurances that all criminal cases against Powell and the Federal Reserve had been "fully and conclusively resolved."
"That was my original concern because I felt that prosecutors in Washington saw this as leverage to force Powell out early," Tillis said in an interview with NBC. After receiving assurances from the Department of Justice, he stated that he was "ready to move forward with Mr. Warsh’s confirmation process."
In his statement on Sunday, Tillis referred to Warsh as an "outstanding nominee" and said, "It is time for the Federal Reserve to move beyond this distraction and refocus entirely on its mission."
Uncertainty remains over Powell's future as Trump leaves room for maneuver.
Despite the expedited confirmation process, uncertainties surrounding Powell have not entirely dissipated. Powell’s term as Chair of the Federal Reserve is set to expire on May 15, but his tenure on the Fed’s Board of Governors extends until 2028, and partial dismissals by the Department of Justice do not guarantee his departure from the board.
When pressed by reporters on Saturday, Trump stated that with Pirro withdrawing the criminal investigation, Warsh’s confirmation process "should proceed smoothly, I think." However, he refrained from giving Powell a "full green light," citing an ongoing review by the Federal Reserve’s Inspector General into renovation cost overruns, stating, "I have an obligation to find out" the reasons behind the excess spending.
This lingering uncertainty suggests that pressure from the Trump administration will persist, potentially becoming a motivation for Powell to remain on the board—even if Warsh is ultimately confirmed by the Senate.
Warsh aims to dismantle forward guidance, posing 'de-anchoring' risks to asset pricing.
Warsh’s policy stance may warrant more market attention than his confirmation itself.
During the April 21 hearing before the Senate Banking Committee, he explicitly called for the elimination of the “dot plot”—the quarterly chart displaying interest rate projections from the 19 FOMC members—and criticized core PCE as a "rough estimate." He characterized the high inflation rates between 2021 and 2022 as a policy failure rather than an external shock, and refused to commit to maintaining regular post-FOMC meeting press conferences, stating that "the pursuit of truth is more important than repetition." He also hinted at reducing the number of annual meetings but did not provide specific figures.
Warsh’s critique directly targets the mechanism of forward guidance—the entire framework through which the Federal Reserve communicates its policy intentions to the market in advance. This system, progressively established by Bernanke after 2008, includes calendar-based commitments, conditional pledges, meticulously parsed statements, and the dot plot. Over the past 15 years, it has quietly become the implicit foundation for global asset pricing.
If Warsh implements these changes, the core tools markets rely on to build interest rate expectations would be removed, leading to the erosion of certainty premiums. Pricing models across equities, bonds, and currency markets would face systemic revaluation pressures.
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Editor/KOKO