Trump names Warsh as next Federal Reserve Chair (IMAGE: X)
U.S. President Donald Trump on Friday announced that he had chosen former Federal Reserve governor Kevin Warsh as the next chair of the Federal Reserve after current chair Jerome Powell steps down in May.
The nomination crowns several months of what seemed to be a kind of public audition as Warsh, White House economist Kevin Hassett and other leading candidates sitting Fed governor Christopher Waller and Wall Street insider Rick Rieder, were featured on TV on a regular basis, selling their credentials and demonstrating their ideas on the economy and Fed policy.
The dollar narrowed down previous gains, and the U.S. Treasury yields were stiff with stock futures showing a negative opening on Wall Street.
Kevin Maxwell Warsh is an American economist and long-term central bank official and a finance financier, born on April 13, 1970, in Albany, New York. During the tenure of Presidents George W Bush and Barack Obama, he was a member of the Federal Reserve Board of Governors between 2006 and 2011. He was among the youngest governors who had ever been appointed.
Warsh has a bachelor’s degree in Stanford University, a law degree in Harvard Law School and further studies in economics and finance in the Massachusetts Institute of Technology(MIT).
He had been employed in the mergers and acquisitions department of Morgan Stanley in New York, becoming an executive director before joining the Federal Reserve.
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“I don’t want to say it’s a total surprise… he was considered a hawk, but recently he seems to have aligned himself with Trump, so it’s kind of difficult to assess how the market is going to accept this nomination.”
“We just have to see whether or not he will be influenced by the White House. My guess is that he will not and that he will look very carefully, he will be somewhat balanced in in terms of inflation, labour markets. Less determined than Powell, but not that far apart.”
BENJAMIN FORD, STRATEGIST, MACRO HIVE, LONDON
“For now, we don’t read too much into the big headline. Instead, we continue to point to our dollar framework: near-term G10 FX outperformance as vols climb. Then, once vols settle, it’ll be a rotation back to favoured emerging-market trades.”
ELIAS HADDAD, GLOBAL HEAD OF MARKETS STRATEGY, BROWN BROTHERS HARRIMAN, LONDON
“His view on the balance sheet and what it means for rates suggest that the yield curve in the U.S. could steepen further as short rates fall, while longer-term rates perhaps stay sticky, or even drift higher, because of lack of U.S. fiscal credibility.
In terms of the dollar impact, it’s neutral and for equity markets, it’s also neutral. He still favours lower rates, so that’s supportive for risk assets. But on the other hand, he wants to significantly reduce the Fed’s balance sheet, which has been a big support for this melt-up in asset prices.”
(With Inputs From Reuters)
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