while Kevin Warsh was Kawkish in the past, but some of his recent comments are really in line with the White house.
A. On AI and Productivity as Policy Drivers
Disinflationary AI: Warsh believes Artificial Intelligence will act as a significant disinflationary force by boosting productivity.
Abandoned Dogma: He proposes abandoning the "dogma" that strong economic growth or rising wages automatically cause inflation, suggesting instead that a productivity boom can support higher wages without price spikes.
Shift to Rate Cuts: More recently, Warsh has pivoted to supporting rate cuts, suggesting that productivity gains from AI are disinflationary and justify lower borrowing costs.
B. On Fed--- "Regime Change"
Ending "Institutional Drift": Warsh intends to pull the Fed back from "politically charged issues" like climate change and diversity initiatives (DEI), which he believes are outside its legal mandate.
Communication Overhaul: He proposes ending the Fed's reliance on forward guidance and constant public "musings" by officials, which he claims offer "false precision" and trap the committee in its own words.
Staffing and Structure: He has hinted at a sweeping overhaul of the Fed's internal staffing levels and how it processes economic data to avoid "fighting the last war".
C. On balance sheet. but his view on balance sheet may be a source of concern.
He has posited that cutting short-term rates could be balanced by shrinking the balance sheet more aggressively--do not know his current stand on this issue.
Just keep in mind, the white house believe, Warsh is the best pick to implement the president's economic agenda. I belive, the rate will go lower under Warsh and there will be a lot of change in FED, while maintain the appearance of Fed independence.
