On May 14, the Senate narrowly confirmed Kevin Warsh as Federal Reserve Chair, marking the most contentious leadership change in the Fed in decades and testing the institution's policy independence.

The Wednesday vote resulted in 54 votes in favor and 45 against, the narrowest margin of confirmation for a Fed Chair in history, since the Senate approved the position in 1977, and no Fed Chair has ever been confirmed with such a slim margin. This reflects the polarized political landscape in Congress and Democratic concerns that Warsh might yield to President Trump’s demands for rapid rate cuts.

In the past, bipartisan support for Fed nominees was common rather than exceptional; Alan Greenspan even received unanimous support in 2000, allowing him to serve multiple terms as Fed Chair. Meanwhile, Powell, whose term ends on Friday, has been confirmed twice with at least 80 votes each time during his leadership of the Fed.

The main challenge facing the incoming Chair is that less than six months remain before the midterm elections, and the Republican majority in Congress, which includes Trump, is under pressure. It remains to be seen whether he will continue the tradition of the Fed making rate decisions free from political influence. Increasingly, Fed officials believe the U.S. central bank should clearly state that its next move could be either a rate cut or a rate hike. For Warsh, this means that if he attempts to steer the Fed toward what officials consider an unreasonable rate cut, he will face fierce opposition.

Warsh also hinted that he would seek to reduce the Fed’s $6.7 trillion balance sheet and argued during the confirmation hearing that rate cuts are more equitable than balance sheet expansion because their benefits are more broadly distributed.