Will Kevin Warsh Carry Trump's Dovish Image at the Fed?

Trump Announces Kevin Warsh as Fed Chair Candidate

U.S. President Donald Trump has announced that Kevin Warsh is the new candidate for the central bank's presidency. In a post on Truth Social on Friday evening, Trump stated, “I have known Warsh for a long time and I have no doubt he will go down in history as one of the greatest chairs of the Fed.”

No Commitment on Rate Cuts Required

Trump mentioned in a statement to reporters that he did not receive any promise from Warsh regarding rate cuts. Warsh, who will replace the current Fed Chair Jerome Powell, whose term ends in May, is subject to Senate confirmation.

Warsh's Thoughts and Investor Expectations

Historically known for his hawkish stance, Warsh expressed last year that interest rates should be lowered. Promising a “regime change” at the Fed, Warsh also committed to shrinking the Fed's balance sheet and believes that productivity gains driven by artificial intelligence will help keep inflation in check.

How Do Investors View Warsh?

Some investors believe that based on Warsh's past experiences, he will adopt a protective approach against rising price pressures. Michael Feroli, chief economist at JPMorgan Chase & Co., expressed his concerns by asking, “Who is the real Kevin Warsh? While he may initially appear to adopt a dove-like stance, will this change over time?”

Neil Dutta, head of economics at Renaissance Macro Research, is questioning the sincerity of Warsh's new stance.