Key Takeaways
- President Trump has nominated Kevin Warsh as the new Federal Reserve Chair.
- Warsh is a former Fed governor and during his 2006-2011 tenure was viewed as a hawk. He has been widely seen as a more credible candidate during the selection process.
- The Fed held rates steady at their last meeting, and it is likely that we have seen the last cut under Jay Powell’s stewardship.
- In terms of market reaction, we have seen both gold and silver sell off sharply from overbought positions.
- Markets currently expect a reduction in rates in June and a further cut before the end of the year. Much depends on what happens in terms of economic data, however, and a likely acceleration in US growth would lessen the justification for further easing.
- Warsh looks like a credible appointment and one that should serve to reassure those concerned about the bank’s independence.
Anthony Willis
Senior Economist, Multi-Asset Solutions team
