Kevin Warsh, President Trump’s nominee to be the next chair of the Federal Reserve, is finally set to have his confirmation hearing on Tuesday in Washington.

Front and center will be the independence of the central bank. Warsh’s responses to senators’ questions on Fed independence, in the wake of a year of unrelenting pressure from President Trump to lower interest rates, are likely to be more consequential than any policy decision facing the central bank.

The hearing, before the Senate Banking Committee, arrives less than a month before current Fed Chair Jerome Powell’s term expires on May 15.

But as things stand now, there is no clear pathway to Warsh’s confirmation.

Republican Senator Thom Tillis, who sits on the banking committee and favors Warsh as a nominee, has vowed to block the confirmation until a Justice Department investigation into Powell is resolved.

The department in January opened a criminal probe into whether Powell lied to Congress in testimony last summer about cost overruns on renovations at the Fed headquarters in Washington. Powell pushed back publicly with a video statement, asserting that the Trump administration was investigating him because it disagreed with the central bank's interest-rate policy. President Trump has repeatedly hammered Powell to lower rates.

Read more: How much control does the president have over the Fed and interest rates?

A federal judge last month threw out two subpoenas the Justice Department issued to the Fed, effectively invalidating the criminal probe. US Attorney Jeanine Pirro has vowed to appeal, and last week prosecutors from her office visited the Fed’s headquarters unannounced but were turned away, several outlets reported.

Without Tillis’s support, Warsh’s nomination can’t move forward. Without Tillis, there are not enough votes on the committee to advance the nomination. All 11 Democrats on the banking committee are expected to vote no.

Henrietta Treyz, director of economic policy at Veda Partners, told Yahoo Finance she recently spent time with Tillis and thinks it’s “extraordinarily unlikely” that he will back down.

“He is very happy to stand up for financial freedom and the independence of the Federal Reserve,” she said. “And I think it is a real internal belief that he has that this is really critically important.”

If confirmed, Warsh will inherit a difficult situation where both sides of the Fed’s mandate are in conflict. Inflation has been running above the Fed’s 2% target for five years, while the job market also shows signs of weakness.

Read more: How jobs, inflation, and the Fed are all related

“Warsh will have to earn market trust and credibility around his commitment to achieving the inflation target; bona fides that always need to be earned by an incoming chair,” Deutsche Bank chief economist Matt Luzzetti said. “The requirement could be more acute in the current context, with inflation well above target for five years, another price shock from the recent surge in oil prices, and the President’s calls for steep Fed rate cuts.”

In comments before he was nominated earlier this year, Warsh was highly critical of the Fed, saying that the central bank should “discard its forecast of stagflation” and arguing that it is overlooking that AI will be a “significant” force that will boost productivity and push down inflation. Warsh argued those factors could allow the Fed to cut rates.

He has criticized Powell personally for making “unwise choices,” such as missing the persistence of post-pandemic inflation. Warsh has said he rejects the belief that inflation is caused by the economy growing too fast and workers getting paid too much. Rather, he argues inflation is caused by the government spending too much and printing too much money.

Warsh was a Fed governor from 2006 to 2011, and at the time he was the youngest governor in the central bank’s history. Before the Fed, Warsh served as special assistant to the president for economic policy and executive secretary of the White House National Economic Council. He currently serves as the Shepard Family Distinguished Visiting Fellow in Economics at the Hoover Institution.

He owns financial assets worth in excess of $100 million, according to government disclosures, including stakes in Elon Musk’s SpaceX and prediction market Polymarket.  (Disclosure: Yahoo Finance has a partnership with Polymarket.)

Warsh’s speeches during his time as Fed governor and transcripts of policy meetings reveal he routinely raised concerns about inflation and protecting central bank credibility by ensuring inflation expectations remain anchored, even as he voted most of his tenure at the central bank to either hold rates steady or lower them.

During his time on the Fed from February 2006 to March 2011, he voted in line with the committee consensus every time and never dissented.

The question now is whether Warsh’s views have changed in light of new geopolitical developments or whether he will argue for near-term rate cuts.

“If Warsh is going to lead a committee that is increasingly supportive of keeping rates steady, he might resist arguing too forcefully for rate cuts in the near-term,” Luzzetti said. “The nuance for Warsh will be how he balances a desire to lower rates over time with an economic backdrop that does not call for rate cuts at present.”

Warsh is also expected to be asked about his current views on monetary policy. To that, Luzzetti said Warsh can discuss temporary inflation risks that require vigilance for a short period before resuming policy easing.

While Warsh has his own views and, as chair, will need to build a consensus, there are 18 other members of a very divided FOMC whom he will have to convince.

Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.

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