Key lawmakers "relaxed their stance," and the "biggest obstacle" for Walsh to take over as Fed chair on May 15 has been cleared.

The biggest political obstacle preventing Kevin Walsh from becoming the Chair of the Federal Reserve has been removed, and his confirmation process is expected to advance rapidly this week.

According to Bloomberg, Thom Tillis, a member of the Senate Banking Committee and Republican Senator from North Carolina, announced on Sunday that he will withdraw his opposition to Walsh's nomination, paving the way for the committee's scheduled vote on April 29.

Previously, the Department of Justice announced the suspension of the criminal investigation into current Fed Chair Jerome Powell. Tillis stated that this decision relieved his core concerns about threats to the Fed’s independence.

Walsh enjoys broad support among Republican senators, and the Senate Banking Committee has scheduled a vote for April 29. If the committee approves the nomination, it will be sent to the full Senate for a vote. It is widely expected that the final confirmation will coincide closely with the expiration of Powell’s term on May 15.

If confirmed, Walsh may initiate sweeping reforms. During last week's hearing, he called for abolishing the “dot plot” and reassessing the forward guidance mechanism, signaling a fundamental change to the core framework that has underpinned global asset pricing for the past 15 years. The pricing logic for stocks, bonds, and currencies may undergo a complete overhaul.

Tillis Withdraws Opposition, Nomination Vote Set for April 29

Tillis previously held a crucial vote in the Senate Banking Committee and explicitly promised to block Walsh's nomination as long as Powell was under federal prosecutor investigation. He characterized the criminal investigation as an attack on the Fed's independence, suggesting the underlying intent was to force Powell to resign prematurely.

On Friday, Washington, DC federal prosecutor Jeanine Pirro announced on social media her decision to drop the criminal investigation into cost overruns for Federal Reserve building renovations and Powell's Congressional testimony, transferring the review to the Fed's Inspector General's office. Tillis promptly communicated with the DOJ and received assurance that all criminal cases against Powell and the Federal Reserve were “completely and thoroughly concluded.”

"That was my original issue, because I sensed the prosecutors in Washington saw this as a bargaining chip to force Powell out early," Tillis said in an interview with NBC. He said that after receiving assurances from the DOJ, he was “ready to move forward with Mr. Walsh’s confirmation.”

In Sunday’s statement, Tillis called Walsh an “outstanding nominee” and said, "It’s time for the Fed to move past this distraction and refocus all its attention back on its mission."

Powell’s Future Remains Uncertain, Trump’s Position Ambiguous

Despite the acceleration of the confirmation process, uncertainties surrounding Powell have not fully dissipated. Powell’s term as Chair of the Fed expires on May 15, but his seat on the Fed board continues until 2028, and partial dismissal of the DOJ case does not guarantee he will leave the board.

On Saturday, when pressed by reporters, Trump responded that with Pirro’s withdrawal of the criminal investigation, Walsh’s confirmation “I think should go smoothly,” but he stopped short of making a definitive statement about Powell, citing the Fed Inspector General’s ongoing review of renovation costs and saying, “I have a duty to find out” the reasons behind the cost overruns.

This ongoing uncertainty means pressure from the Trump administration may persist, which could ironically increase the likelihood of Powell remaining on the board—even if Walsh is ultimately confirmed by the Senate.

Walsh Aims to Undo Forward Guidance, Asset Pricing Faces ‘Unanchoring’ Risk

Walsh’s policy positions may be more relevant to the market than his confirmation itself.

At the Senate Banking Committee hearing on April 21, he explicitly called for abolishing the “dot plot”—the chart published quarterly that shows rate forecasts from 19 FOMC members—and criticized core PCE as a “rough estimate.” He characterized the high inflation of 2021 to 2022 as a policy error rather than an external shock and refused to commit to holding regular press conferences after each FOMC meeting, saying “the pursuit of truth is more important than repetition.” He also hinted at possibly reducing the number of annual meetings, but did not specify a figure.

Walsh directly targeted the forward guidance mechanism—that is, the Fed’s entire framework for signaling policy intentions to the market in advance. This system, gradually established by Ben Bernanke after 2008, includes calendar-based commitments, conditional promises, market-parsed statements, and the dot plot. Over the past 15 years, it has quietly become the implicit foundation for global asset pricing.

If Walsh implements these changes, the core tools the market uses to build interest rate expectations will be removed, certainty premiums will diminish, and pricing models for stocks, bonds, and currencies will face systemic re-evaluation pressure.

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