Loading ...So, the market thinks that Trump’s new Fed Chair is going to be pro interest rate increases?
Warsh Will Likely Advocate for Rate Cuts, Just Not In a Vacuum
The selection could significantly affect the Federal Reserve’s monetary policy and future levels of the fed funds rate, which in turn influence borrowing costs for all kinds of loans. Warsh, a lawyer and banker, has appeared on television, praising Trump’s policies and advocating for rate cuts.
“We can lower interest rates a lot,” Warsh said on Fox News in October.1
However, he may not be as “dovish” or as inclined toward rate cuts as some of the other candidates for the job were.
“Although Warsh has argued for lower rates recently, we do not view him as structurally dovish,” Matthew Luzzetti, chief economist at Deutsche Bank, wrote in a commentary in December.
IF YOU THINK THIS GUY IS GOING TO COME IN AND HOLD THE LINE ON INTEREST RATES WHEN THE US HAS TO ISSUE 13 BILLION IN US TREASURIES THIS YEAR, I WANT TO SELL YOU SOME BRIDGES IN BROOKLYN. LOWER INTEREST RATES ARE BEARISH FOR USD, BULLISH FOR HARD ASSETS. It’s like you were going to Macy’s to shop, and when you came through the doors they announced a flash sale, everything in the store 10% off for 2 days.
This is a gift if you see it, especially if you have missed this whole run up in the PM’s…..”search your heart Luke, you know it to be true!”
In a vacuum, Warsh has been be my first choice, hands down, all along.
He wrote a paper a few years back, that for those who read it, said that likely disqualified him on political grounds for any future consideration as Fed chair. It was that blunt and grounded. He knows the score.
I’ll try to find it, and then post a link, over coming days.
AND … now that this news is out. It was likely circulating privately for a few days.
And some of this market action may be IN RESPONSE to the rumors. And then the fact.