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Key Senator "Relents," Powell to Take Over as Fed Chair on May 15, "Biggest Hurdle" Cleared

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Once confirmed, Wash is expected to embark on a sweeping reform.

Original Title: "Key Senator 'Backs Down,' Powell Succession on May 15 Becomes Fed Chair Powell's 'Biggest Hurdle' Cleared,"

The key political obstacle blocking Kevin Warsh's appointment as Federal Reserve Chair has been removed, as Republican Senator Thom Tillis of North Carolina announced on Sunday that he would withdraw his opposition to Warsh's nomination.

The biggest political obstacle blocking Kevin Warsh's appointment as Federal Reserve Chair has now been removed, and the confirmation process is expected to move swiftly this week.

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

Previously, the Department of Justice announced the closure of the criminal investigation into current Fed Chair Powell. Tillis stated that this decision alleviated his core concerns about the Fed's independence being threatened.

Warsh enjoys broad support among Republican senators, and the Senate Banking Committee has scheduled the nomination vote for April 29. If the committee approves the nomination, it will be submitted to a full Senate vote, with the timing of the final confirmation expected to align closely with Powell's term expiring on May 15.

Once confirmed, Warsh may embark on significant reforms. At last week's hearing, he called for the abolition of the "dot plot" and a reevaluation of the forward guidance framework, signaling a fundamental shift in the core framework that has underpinned global asset pricing for the past 15 years. This could lead to a comprehensive restructuring of the logic behind stock, bond, and currency market pricing.

Tillis Withdraws Opposition, Nomination Vote Set for April 29

Tillis previously held a key vote in the Senate Banking Committee and explicitly pledged that as long as Powell was under federal prosecutor investigation, he would block Warsh's nomination. He characterized this criminal investigation as an attack on the Fed's independence, believing the underlying intent was to force Powell to resign early.

On Friday, Washington, D.C. federal prosecutor Jeanine Pirro announced on social media that she would be dropping the criminal investigation into the Fed's building renovation overspending and Powell's congressional testimony, transferring it to the Fed's Inspector General for review.

Tillis then communicated with the Department of Justice and received assurance that the criminal cases against Powell and the Fed had been "completely and thoroughly resolved."

“This was my initial concern, because I felt that Washington prosecutors believed this could be used as leverage to force Powell to step down early,” Tillis said in an interview with NBC. He said that after receiving assurance from the Department of Justice, he was “ready to move forward with Mr. Walsh's confirmation process.”

In a statement on Sunday, Tillis referred to Walsh as an “outstanding nominee” and said, “Now is the time for the Fed to move beyond this disruption and refocus all attention on its mission.”

Powell's Departure Still Uncertain, Trump's Attitude Leaves Room for Maneuver

Despite the accelerated confirmation process, uncertainty surrounding Powell has not completely dissipated. Powell's term as Fed chair expires on May 15, but his term as a Board member extends until 2028, and the partial withdrawal of the case by the Department of Justice does not guarantee that he will leave the Board.

On Saturday, when asked by reporters, Trump said that with Pirro withdrawing the criminal investigation, Walsh's confirmation path “I think should be smooth,” but he refused to give a “full pass” to Powell, citing the Federal Reserve Inspector General's ongoing review of renovation expenses, saying, “I have an obligation to find out” the reasons behind the overspending.

This ongoing uncertainty means that the pressure from the Trump administration will continue, which may instead become a reason for Powell to remain on the Board—even if Walsh is ultimately confirmed by the Senate.

Walsh Seeks to Dismantle Forward Guidance, Asset Pricing Faces “Anchorless” Risk

Walsh's policy stance may be more worthy of market attention than his confirmation itself.

At the Senate Banking Committee hearing on April 21, he explicitly called for the abolition of the “dot plot”—a chart released quarterly containing the interest rate forecasts of the 19 FOMC members—and criticized the core PCE as a “rough estimate.”

He characterized the high inflation from 2021 to 2022 as a policy mistake rather than an external shock and refused to commit to holding regular press conferences after each FOMC meeting, stating that “the pursuit of truth is more important than repetition.” He also hinted at the possibility of reducing the number of meetings per year but did not provide a specific number.

Walsh's focus is squarely on forward guidance, a mechanism through which the Fed proactively communicates its policy intentions to the market. This system, gradually established by Bernanke after 2008, includes calendar-based commitments, conditionality commitments, statements subject to market interpretation, and the dot plot, quietly becoming the implicit foundation of global asset pricing over the past 15 years.

If Walsh were to implement this, the core tool on which the market relies to build interest rate expectations would be removed, diminishing certainty premiums, and pricing models for stocks, bonds, and exchange rates would face systemic revaluation pressures.