Wash Time Fed: Dove or Hawk? Institutional Forecast Views Summary

BlockBeats News, February 2nd, Trump nominated Wash as the next Fed chair last Friday, and traders priced in two rate cuts by the Fed this year. Wall Street investment bank analysts have offered various opinions on the outlook for U.S. monetary policy during the Wash era, summarized by BlockBeats as follows:

BlueBay Asset Management CIO Mark Dowding said the market generally expects that Kevin Wash will provide reasons for a dovish stance, advocating that the productivity gains from artificial intelligence will ensure controlled inflation. Therefore, the futures market continues to expect the Fed to cut rates twice this year. Compared to other potential candidates, Wash may be seen as less dovish.

Sparta Capital Securities Chief Market Strategist Peter Cardillo said, Wash has always been considered leaning hawkish, but recently he seems to be aligning with Trump's position. Speculation is that Wash will not be influenced by the White House and will remain cautious while striking a certain balance.

GlassRatner Advisory & Capital Group Managing Director Seth R Freeman pointed out that one of Wash's primary tasks as the newly appointed Fed chair will be to rebuild global market credibility. In addition, following Wash's nomination, the sharp drop in gold and silver prices indicates that the market will face a stronger dollar and a different environment. If precious metal prices do not rebound significantly next week, it should not come as a surprise. Traders heavily invested in precious metals with a hawkish bias like Wash may face losses, especially those with unhedged or short positions.

10x Research founder Markus Thielen stated, "The market generally believes that Wash's election is bearish for Bitcoin because he emphasizes monetary discipline, higher real interest rates, and lower liquidity, making cryptocurrency no longer seen as a hedge against currency devaluation but as a speculative overreaction. When loose monetary policy exits, this overreaction will disappear, and from this perspective, his approach is likely to lead to higher unemployment rates, slower economic recovery, and greater deflation risks in the 2010s."

Finally, Wash himself published an article titled "Fed Leadership Breakdown" in November last year. Wash proposed four changes that the Fed should make, outlining his future policy vision:

1. Adjust Forecasts: Abandon stagflation forecasts and recognize that AI will drive real wage growth and an increase in living standards.

2. Correct Inflation Understanding: Acknowledge that inflation arises from fiscal and monetary overissuance, not economic growth.

3. Reduce the Balance Sheet and Redeploy Funds: Shrink the balance sheet and redirect resources to households and small and medium-sized enterprises.

4. Reform the Regulatory Framework: Support easing excessive regulation on small banks to stimulate domestic credit growth.