Warsh confirmation timeline hinges on Powell probe, 60% odds of resolution
- In the absence of drama, Warsh’s confirmation could take few days. For instance, Powell’s first term confirmation took less than 20 days while his second-term confirmation took around 4 months. Similarly, Yellen’s 2013 confirmation took around 3 months.
- Based on past nominations (e.g. that of Powell and Yellen), President Trump already delayed by at least one month in nominating Warsh.
- More than half a half-dozen Republicans recently came out to criticize the investigation into Powell.
- Republican party currently makes up 53 while Democrat make up 45 and Independent make up 2 positions in the US Senate, and a simple majority is needed to confirm Warsh’s nomination.
- If Warsh is not confirmed by May 15 (when Powell’s term will come to an end), Fed Vice Chair Philip Jefferson, who is currently against further rate cuts unless data supports it, will take over in an acting capacity.
- Trump said on Friday that he was open to waiting for Warsh’s confirmation until Tillis, who is not seeking reelection this year, left the Senate and called him an “obstructionist.”
Assessment
Based on all those findings, if Trump doesn’t ask the DOJ to end the investigation into Powell, I think Warsh’s confirmation could be delayed by at least two months (probability:70%).
Given Trump’s strong desire for rate cuts and the fact that the current Vice Chair is currently hawkish, I think the probability that he calls for an end to Powell’s investigation is high (probably 60%).
As pointed above, his past support for higher interest rates could make him acceptable to some Democrats. Therefore, I would put the probability of becoming the next Fed chair at over 95%.