The Senate has barely approved the new head of the US central bank. What the media is writing

Kevin Warsh, who enjoys the support of President Donald Trump, has become the new chairman of the US Federal Reserve System (FRS). His confirmation split the Senate, and he received significantly less support than most of his predecessors. Although Warsh is expected to pursue a policy of lowering interest rates, high inflation in the United States may prevent him from doing so. What the media write about the new head of the American central bank is in the Izvestia digest.

Bloomberg: The Senate has confirmed Kevin Warsh as head of the Federal Reserve System

The Senate confirmed Kevin Warsh as chairman of the Federal Reserve by a narrow margin of votes, which led to the most controversial leadership change at the central bank of the United States in recent decades and became a test of its political independence. The vote, which ended with a score of 54-45, was the smallest margin of votes in the history of the approval of the head of the regulator, reflecting the polarization of the political situation in Congress and Democrats' fears that Warsh would yield to President Donald Trump's demands for a rapid reduction in interest rates.

The Senate held a vote a few hours after the publication of a government report on wholesale prices, which increased concerns about accelerating inflation. The producer price index rose by 6% in April compared with last year, surpassing all forecasts of economists. The base rate of wholesale inflation, excluding food and energy, increased by 5.2%, indicating that the increase in energy prices caused by the war with Iran is spreading to other goods.

The Washington Post: Trump's allies warn that interest rate cuts will have to be postponed

Trump has finally got a new Fed chairman. However, his allies are not convinced that he will achieve a reduction in interest rates in the near future. In the run-up to the vote, former Trump strategist Stephen Bannon prepared supporters for disappointment in his podcast. He said the new inflation data makes it "extremely unlikely" that Warsh will have "the opportunity to cut rates in June," when he will chair the central bank's monetary policy meeting for the first time.

Warsh, 56, inherited a central bank that Trump has been trying to bend to his will since his return to the presidency last year, repeatedly threatening to fire Chairman Powell and inciting a criminal investigation into him. At the same time, a narrower majority of votes in approving the candidacy may complicate Warsh's ability to demonstrate independence from the White House.

Reuters: Investors are preparing for high yields on U.S. Treasury bonds

Investors are preparing for U.S. Treasury bond yields to remain high for a long time, skeptical about whether new Fed Chairman Kevin Warsh will be able to curb inflation caused by a sharp rise in oil prices during the protracted conflict in the Middle East. Bond yields, including benchmark 10-year ones, have risen sharply as investors demand more compensation for inflationary risk amid rising energy prices.

Higher yields on the underlying bonds may also create obstacles for U.S. stock prices, as companies and consumers will face higher borrowing costs. It could also negatively affect economic growth and corporate profits, while potentially making bond yields more competitive compared to stocks. Investors say that persistent inflation will be a problem for Warsh, who may have to face a split among politicians.

Hidden threat: the US has launched a criminal investigation against the head of the Federal Reserve

The case is related to the costs of repairing the regulator's headquarters

Politico: Warsh's approval marks a new era for the central bank

Warsh is starting work at a tense moment for the central bank, when Trump is actively pushing for a sharp reduction in interest rates by the Fed, a step that Powell has resisted for more than a year. It may also be difficult for Warsh to complete this task in the near future, given the sharp rise in energy, food and wholesale prices caused by the war in Iran and internal disagreements at the Fed. However, the future chairman, who previously served on the Fed's board of directors from 2006 to 2011, has many other ambitions for the world's largest central bank.

Warsh also said that the Fed's practice of buying trillions of dollars in U.S. government bonds and mortgages, which it carried out after global crises to stimulate the economy, leads to distortions in stock and bond prices. He expressed a desire to reduce the volume of these assets, which, according to some, could harm the markets. Disagreements on these issues with then-Chairman Ben Bernanke, with whom he worked closely during the financial crisis, led him to resign from the Fed's board of directors in 2011.