Warsh’s Plan to Change the Fed

Summary

Andrew Sheets reviews Kevin Warsh's Senate testimony as nominee for Fed chair. He highlights Warsh's view that AI investment will boost productivity and lower interest rates, and his criticism of past Fed actions. Sheets expects markets to focus elsewhere in the near term.

• Warsh nominated for Fed chair and testified before the Senate.
• He believes the AI/tech investment boom will boost productivity.
• That productivity increase should lower inflation and allow lower interest rates.
• Warsh criticized the Fed for past balance sheet expansion and slow inflation response.
• He outlined a sweeping agenda for change in forecasting, asset management, and communication.
• The Fed's committee vote process may pose challenges for Warsh's views.
• Sheets expects relatively modest Fed policy shifts in the near term.
• Iran conflict continues to disrupt global energy markets.