Kevin Warsh has now officially been sworn in as the 17th Chairman of the Federal Reserve or Fed in the White House. In his inaugural speech, he promised to bring about major reforms by abandoning the old economic formula in order to drive more vigorous growth.
Although President Donald Trump has openly insisted that the new chairman will act independently without political interference, the market knows otherwise. Trump has never hidden his dream of seeing the Fed cut interest rates immediately.
Waiting for the June Mystery
Economists see that Warsh will most likely abandon the old FED tradition such as the interest rate dot plot projection (FED Dot Plot) during the FOMC meeting in June. This step was taken to avoid an open clash with Trump if the interest rate forecast seems too firm for the market.
However, this strategy of silence could backfire if personal spending or Core PCE inflation data to be reported this week shows a sudden increase. The heated situation could trigger internal fights with other committee members who want monetary policy firmness.
