A significant development in the realm of US financial policy has occurred, as the Department of Justice, under President Donald Trump, has relinquished its investigation into Federal Reserve Chair Jerome Powell. This move may pave the way for Trump's nominee, Kevin Warsh, to take over as Fed Chair, as Warsh awaits a final Senate vote following his confirmation hearing.
Trump has been a vocal critic of Powell, blaming him for high US interest rates, and has chosen Warsh as his replacement. However, Republican Senator Thom Tillis had previously threatened to block Warsh's confirmation as long as the DOJ's investigation into Powell continued, citing cost overruns in a Fed building project.
The investigation's closure has led to a significant increase in the predicted likelihood of Warsh's confirmation before May 15, with odds rising from around 30% to over 80%. The US Attorney for the District of Columbia, Jeanine Pirro, stated that the DOJ has requested the Fed's inspector general to investigate the matter and issue a report, adding that she will not hesitate to restart the investigation if warranted. This development could grant Trump greater influence over US monetary policy, with Warsh's potential appointment allowing the president to have more allies on the Fed board.
The move has been met with criticism from Senator Elizabeth Warren, who dismissed it as an attempt to clear the path for Warsh's confirmation, while Senator Tillis has expressed his support for the nominee, calling him 'great' and stating that he would vote in favor of Warsh once the DOJ dropped its investigation into Powell.