The U.S. Senate has canceled next week's "Waller nomination confirmation hearing," while Powell's term expires on May 15.
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The selection of the new Federal Reserve Chair remains undecided, with the window for power transition narrowing.
On Thursday, April 9, according to Punchbowl News citing two informed sources, the U.S. Senate Banking Committee has canceled the confirmation hearing for Kevin Warsh’s nomination that was originally scheduled for next week.
As of Thursday evening local time, the committee has not set or announced a new hearing date. Given committee rules requiring five days advance notice and that hearings are almost exclusively held from Tuesday to Thursday, the earliest possible new hearing date has been postponed to April 21.
Incumbent Federal Reserve Chair Powell’s term will expire on May 15. The delay in Warsh’s nomination process is resulting in a shrinking window for the Senate to complete full confirmation.
Powell previously stated that if Warsh has not been confirmed by then, he will continue to serve as “acting chair.”
Political obstacles persist, White House seeks to bridge differences
Warsh’s nomination for Fed Chair is currently facing bipartisan resistance in the U.S. Congress.
Democrats have clearly expressed opposition, and Republican Senator Thom Tillis has also announced he will not support Warsh’s nomination, reasoning that the Trump administration is conducting a criminal investigation into current Chair Powell.
Nonetheless, on Thursday, National Economic Council (NEC) Director Kevin Hassett stated in a media interview that Warsh’s nomination is “absolutely” moving forward smoothly and expressed high confidence in eventual confirmation.
Regarding Senator Tillis’s political resistance, Hassett said the Trump administration will “reach some kind of solution” with Tillis, emphasizing that promoting strong candidates to the Federal Reserve is crucial.
On interest rate policy, Hassett revealed that he believes rates should be lowered and stated Warsh “likely thinks so as well,” noting this topic will be formally discussed at the hearing.
On the arrangement after Powell’s departure, Hassett stated that Powell has signaled he will actively step down once the new chair is confirmed. Hassett said:
That’s what he should do.
Hassett added that Powell is not expected to remain on the Fed Board at that time.
Geopolitical conflict and mounting economic pressure add uncertainty to the nomination
The nomination delay comes amid intensifying global economic turmoil.
The U.S. and Israel’s joint military action has led to Iranian retaliation against U.S. targets and energy infrastructure in the Gulf, effectively halting tanker transit through the Strait of Hormuz. Under normal conditions, the strait accounts for about one-fifth of global daily oil consumption; the blockade has caused global energy prices to surge rapidly.
In the interview, Hassett downplayed the long-term impact of this shock, saying supply shocks in the economic literature are generally seen as “temporary disturbances that should be disregarded,” and noted that many within the Fed share this view, believing it won’t affect long-term inflation trends.
However, corporate America’s concerns have not dissipated.
BlackRock CEO Larry Fink warned in late March that if international oil prices reach $150 per barrel, the global economy could slip into recession.
United Airlines CEO Scott Kirby said the company is planning on the baseline scenario that oil prices will remain above $100 per barrel into next year and is proactively cutting flight capacity as a result. Kirby stated:
We hope things will get better, but the cost of planning for this scenario is quite low. We’d rather lose some demand if oil prices fall, than not be prepared for a scenario where oil prices stay high for the long term.
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