Fed Chair Nominee Warsh Has to Win 'Hearts and Minds' of FOMC, Dudley Says

Summary

Bill Dudley discusses the uncertainties surrounding the Federal Reserve chair nomination involving Jerome Powell and Kevin Warsh, highlighting concerns about central bank independence. He analyzes inflation expectations, the outlook for monetary policy, and the limited impact of balance sheet reduction on interest rates. Dudley emphasizes persistent inflation risks from past overshoots and political pressures.

• Discussion on Fed Chair nomination and potential firing of Jerome Powell.
• Concerns about central bank independence affecting inflation expectations.
• Outlook for Fed policy: unlikely to cut rates in June due to high inflation.
• Analysis of balance sheet reduction: minimal restraint on economy and interest rates.
• Inflation risks from commodity shocks seen as temporary.
• Emphasis on Fed credibility in anchoring inflation expectations.
• Political challenges for nominee Kevin Warsh in winning FOMC trust.
• Treasury-Fed accord on balance sheet and rate control discussed.