Kevin Warsh is one step closer to top job at the Fed after Trump's pick approved by Senate committee

WASHINGTON (AP) — The Senate Banking Committee voted on party lines Wednesday to approve Kevin Warsh as the next chair of the Federal Reserve to replace Jerome Powell, a longtime target of President Donald Trump’s insults for not cutting borrowing costs as far as the president wanted.

The vote was 13-11, with all Republican senators voting in favor and Democrats opposed.

Warsh is a former top Fed official but has also been a sharp critic of the institution and Powell’s leadership. He has called the inflation spike to 9.1% in 2022 the central bank’s biggest policy mistake in four decades. A vote on his nomination probably won’t take place until next month, but he could be confirmed by the time Powell’s term as chair ends May 15.

The Senate Banking vote is the first of two key events surrounding the future of the Fed’s leadership. Also Wednesday, Powell is presiding over what will probably be his last meeting of the Fed’s interest rate-setting committee. At a news conference Wednesday afternoon, Powell may indicate whether he will remain as a member of the central bank’s board of governors after his term as chair ends.

It would be unusual for Powell to stay, but doing so would deprive the Trump administration of an opportunity to appoint a new member to the board. Powell may choose to stay if he sees it as necessary to protect the Fed’s independence, which has become part of his legacy as its leader.

Sen. Tim Scott, a South Carolina Republican and chair of the committee, said Warsh is “battle tested” and added that, "It is incredibly important that we break the bind of Bidenomics on households across this nation.”

Sen. Elizabeth Warren, a Democrat from Massachusetts, criticized the banking panel for voting on Warsh's nomination. Doing so “will bring the president one step closer to completing his illegal attempt to seize control of the Fed and artificially juice the economy,” she said, citing Trump's effort to fire Fed governor Lisa Cook and investigate Powell.

The Fed on Wednesday is widely expected to leave its key rate unchanged at about 3.6% for its third straight meeting, defying Trump’s calls for lower rates.

Warsh has called for “regime change” at the Fed and could alter many of its practices, including the economics models it focuses on, how it communicates with the public, and how large its bondholdings will be in the long run.

Those changes could affect financial markets, but otherwise won’t necessarily be visible to the general public. But Warsh has also advocated for additional interest rate cuts, which could potentially lower borrowing costs for mortgages, auto loans, and business loans. He will face barriers to implementing those cuts anytime soon, however, largely because the Iran war has caused a spike in gas prices, pushing inflation to a two-year high of 3.3%.

The Fed typically keeps rates elevated, or even raises them, to combat worsening inflation.

Most of the other 11 members of the Fed’s rate-setting committee have indicated they would prefer to wait and evaluate where inflation and the economy are headed before making any changes to rates. It could take time for Warsh to build up enough influence to push for rapid rate cuts. He will also replace Stephen Miran, a member of the Fed’s rate-setting committee who was appointed by Trump last September and is the most consistent advocate for rate reductions at the central bank.

Warsh also faces questions about his independence from the White House, a key issue that dogged him during a Senate Banking hearing last week. On Wednesday, Warren said, “Mr. Warsh is a Trump sock puppet who is so cowed by the president that he could not even say that Trump lost the 2020 election.”

Last December, Trump called for much lower interest rates in a social media post, and added that “anyone who does not agree with me will never be Fed chair!” And just last week he told Fox Business that he expects rates to head lower, “when Kevin gets in.”

Warsh denied at his hearing, however, that Trump had ever pressured him directly to cut rates.

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

NEW YORK (AP) — The U.S. stock market is drifting in mixed trading Wednesday as the countdown ticks to an afternoon announcement from the Federal Reserve on what it will do with interest rates. Oil prices, meanwhile, continued to spurt higher because of the war with Iran.

The S&P 500 was virtually unchanged in morning trading, a day after falling from its all-time high due to drops for artificial-intelligence stocks and worries about higher oil prices. The Dow Jones Industrial Average was down 222 points, or 0.5%, as of 10:45 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.

Another procession of profit reports from companies showing stronger growth for the start of 2026 than analysts expected helped support the market.

Visa jumped 9.3% after delivering stronger results than analysts expected, and CEO Ryan McInerney said consumer spending remained resilient in the quarter. Starbucks climbed 7.8% after likewise reporting better results than expected, while saying customers spent more at each visit, particularly at its North American stores.

Most companies so far this earnings reporting season have been topping analysts’ expectations, which has helped the U.S. stock market rally to records despite the high gasoline costs and soured confidence among U.S. households caused by the Iran war.

But those not meeting expectations have gotten punished. GE Healthcare Technologies dropped 13.2% after falling short of analysts’ forecasts. Robinhood Markets tumbled 14.1% after reporting growth in profit that was not as strong as analysts expected.

Booking Holdings swung between losses and gains after the online travel company said the war with Iran is affecting its results and kept some potential customers from booking rooms during the latest quarter.

The company behind Booking.com, Priceline and other brands is expecting the conflict to continue affecting its business through the end of June. It could affect travel not only in the Middle East specifically but also in major transit corridors, such as between Europe and Asia.

The clearest result in financial markets of the war with Iran is how high oil prices have jumped. The price for a barrel of Brent crude to be delivered in June rose again Wednesday, up 5% to $116.77. Brent for delivery in July, which is where more of the trading is happening in the oil market, rose 4.6% to $109.21.

Brent’s price is approaching its high point of the war, slightly above $119 per barrel, and is well above its roughly $70 level from before the war began. A ceasefire is still in place between the United States and Iran, but so is a closure of the Strait of Hormuz by Iran and a U.S. blockade of Iran's ships. That's all keeping oil prices high.

Expensive oil is one of the main reasons virtually all of Wall Street believes the Federal Reserve will not announce a resumption of its cuts to interest rates in the afternoon. While lower rates can help the economy, they also risk worsening inflation.

The consensus among traders is instead that the Fed will hold the federal funds rate steady in what’s likely to be Jerome Powell’s final Fed meeting as its chair. The bigger question is whether Powell will say if he’s staying on at the Fed after ceding the chairmanship. He has been a target of President Donald Trump’s anger for not cutting interest rates more quickly and more sharply.

The yield on the 10-year Treasury rose to 4.39% from 4.36% late Tuesday following the latest rise in oil prices.

Elsewhere on Wall Street, several AI stocks held firmer ahead of reports due after trading ends for the day from the biggest spenders on AI technology. Alphabet, Amazon, Meta Platforms and Microsoft could help show whether all the investment in AI chips and data centers is providing the kind of profits and productivity that would make it all worth it. Worries are high on Wall Street that it may not be and that all the immense spending is just a bubble.

Broadcom added 0.4%, a day after falling 4.4%. Micron Technology rose 4% after Tuesday’s 3.9% slide.

In stock markets abroad, indexes were mixed in Europe following a stronger finish in Asia. Hong Kong’s Hang Seng jumped 1.7% for one of the world’s strongest moves.

AP Business Writer Chan Ho-him contributed to this report.

FILE - A train arrives at a Wall Street subway station in New York's Financial District on Nov. 5, 2024. (AP Photo/Peter Morgan, File)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), top center, and the foreign exchange rate between U.S. dollar and South Korean won, top center left, at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Wednesday, April 29, 2026. (AP Photo/Ahn Young-joon)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top center, and the foreign exchange rate between U.S. dollar and South Korean won, top center left, at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Wednesday, April 29, 2026. (AP Photo/Ahn Young-joon)

A currency trader reacts near a screen showing the Korea Composite Stock Price Index (KOSPI), right, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Wednesday, April 29, 2026. (AP Photo/Ahn Young-joon)