A MARTÍNEZ, HOST:
The Federal Reserve is expected to keep interest rates where they are this afternoon, but change is still coming. Today's rate-setting meeting is likely to be the last one that Jerome Powell presides over as chair of the central bank. The Senate Banking Committee has confirmed this morning President Trump's pick to replace Powell - Kevin Warsh. If approved by the full Senate, he would take over when Powell's term expires next month. NPR's Scott Horsley is here now.
Scott, the president, for a long time now, has been demanding that the Fed lower interest rates. Doesn't seem, though, that he's going to get his way.
SCOTT HORSLEY, BYLINE: Not right away. You know, inflation is still running a bit hotter than the Fed would like, and the war with Iran is not helping on that score. It's triggered a sharp spike in energy prices. The average price of gasoline jumped another nickel overnight. So long as that's the case, I think most Fed policymakers are going to be wary about cutting interest rates.
Now, it does look as if the president's going to get his way with his choice of a new Fed chairman, though. That was not necessarily the case just a week ago. You know, Republican Senator Thom Tillis of North Carolina had been threatening to block this nomination to protest the Justice Department for investigating the Fed. That was widely seen as part of a pressure campaign by the White House to force the central bank to lower interest rates. That roadblock was finally removed though when the Justice Department announced on Friday it was dropping that criminal investigation. And as Senator Tillis told NBC's "Meet The Press" over the weekend, he is now ready to support Kevin Warsh's nomination.
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THOM TILLIS: With the assurances from the Department of Justice that the case is completely and fully settled, I am prepared to move on with the confirmation of Mr. Warsh. I think he's going to be a great Fed chair.
HORSLEY: With Tillis' backing, Warsh's nomination cleared the banking committee this morning and now moves on to the full Senate. And despite opposition from Senate Democrats, that means Warsh is likely to be confirmed in time to take over as Fed chairman when Powell's term expires next month.
MARTÍNEZ: What's Jerome Powell going to do next?
HORSLEY: That's still up in the air. You know, Powell's been on the Fed board for almost 14 years, the last eight as chairman. At 73, he is certainly entitled to a nice retirement, but he has the option to stay on the Fed's governing board through early 2028. Now, that would be an unusual move. Fed chairs typically leave the central bank altogether when their term as chairman's up. But, you know, Powell has been a fierce defender of the central bank's ability to operate independently of the White House, and he might see staying on the board as a way to shield that independence. At his last news conference eight weeks ago, Powell said he had not yet made up his mind.
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JEROME POWELL: And I will make that decision based on what I think is best for the institution and for the people we serve.
HORSLEY: Powell's sure to be asked again about his plans at today's news conference, so maybe we'll get an update. Or maybe we'll have to wait a little longer.
MARTÍNEZ: OK. So when the Fed gets a new chairman, what kind of changes should we be looking for?
HORSLEY: During his confirmation hearing last week, Kevin Warsh talked about wanting to change the way the Fed communicates with the public - maybe talking a little less, for example. He also talked about exploring new ways to measure inflation. On interest rates, he has argued that there is room to make cuts without sparking more inflation, but he has also insisted he would not be taking marching orders from the president.
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KEVIN WARSH: The president never asked me to commit to interest rate cuts at any particular meeting over the period of my tenure at the Fed. He didn't ask for it. He didn't demand it. He didn't require it, and nor would I have ever done so.
HORSLEY: Even if he wanted to do the president's bidding, Warsh could not do so all by himself. Interest rates are set by a 12-person committee, and the chair gets just one vote. So, you know, it's possible Warsh himself might end up facing the same kind of browbeating from President Trump that Jerome Powell has.
MARTÍNEZ: NPR's Scott Horsley. Scott, thanks.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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