(WASHINGTON) -- A Senate committee on Wednesday voted to advance Fed chair nominee Kevin Warsh, clearing a key hurdle in his path to replace Fed Chair Jerome Powell before his term ends next month. Warsh's nomination will move to a confirmation vote on the floor of the upper chamber.
The Senate Banking Committee voted 13-11 to approve the nomination on a party-line vote, with Republicans supporting the nomination and Democrats opposing it.
The vote comes days after the Department of Justice moved to drop its criminal probe into Powell. Before that, Warsh had faced a bipartisan stonewall in the Senate Banking Committee over the probe.
Sen. Thom Tillis, R-N.C., who previously vowed to oppose Warsh's nomination on account of the investigation, said he would flip his vote after the investigation was set aside. Tillis voted to approve the nomination on Wednesday.
The probe into Powell focuses on alleged false testimony to Congress about an office renovation. Powell, who was appointed by Trump in 2017, has rebuked the investigation as a politically motivated effort to influence interest-rate policy.
Powell's term as Fed chair ends on May 15, but he said last month he would stay in the position until Warsh is confirmed.
Warsh, a former Fed official, is currently a fellow at a conservative think tank called the Hoover Institution, which is based at Stanford University.
At testimony before the Senate Banking Committee last week, Democrats sharply criticized Warsh, saying the independence of the Fed would be at risk if Warsh were to take policy cues from Trump.
In his opening remarks, Warsh voiced support for the independence of the Fed in its role setting interest rates. He used the term "monetary policy" to describe the central bank's task of adjusting benchmark borrowing costs.
"Monetary policy independence is essential. Monetary policymakers must act in the nation's interest," Warsh said.
Still, Warsh defended the right of public officials, including presidents, to voice their views on interest-rate policy, saying such comments do not infringe on Fed independence.
"Central bankers must be strong enough to listen to a diversity of views from all corners," Warsh said.
Sen. Elizabeth Warren, D-Mass., the top Democrat on the committee, responded directly to Warsh's defense of a president's right to criticize the Fed, saying the federal investigation of Powell amounts to a pressure campaign that extends beyond public criticism of Fed policies.
"You said it’s perfectly fine for elected officials to state their views on interest rates. But that’s not what Donald Trump is doing," Warren said, addressing Warsh.
Republicans, including Sen. Tim Scott, R-S.C., the chairman of the Senate Banking Committee, praised Warsh, saying the Fed nominee would focus central bank policy on economic stewardship. During the tenure of President Joe Biden, Scott claimed, the Fed shifted some of its attention to the implications of issues like climate change.
"An independent Federal Reserve is essential to achieving its mission. That independence must be protected," Scott said.
During his term as a Fed governor in the late 2000s and early 2010s, Warsh gained a reputation as an interest-rate “hawk,” meaning he generally preferred higher interest rates as a means of ensuring low and stable inflation.
In recent months, however, Warsh has voiced support for lower interest rates, rebuking the Fed’s concern about inflation risk posed by a flurry of new tariffs issued last year.
The Senate committee vote came hours before the Fed is set to announce its latest decision on the level of interest rates. The central bank is widely expected to hold interest rates steady.