Chairman Warsh Swiftly Puts His Stamp on the Fed 

Bill Campbell, head of the firm’s Global Sovereign & Emerging Markets (GSEM) team, surveys Federal Reserve Chairman Kevin Warsh’s fast-moving overhaul of the central bank, a reorganization ultimately aimed at “a new policy-setting regime rooted more in a reaction to hard data and market outcomes than in econometric models and dogma.” Looking to the near term and beyond, Mr. Campbell writes, “Kevin Warsh is on the way to implementing some of the largest changes to the Fed in decades. Whether these changes successfully reduce inflation and increase growth via supply remains a question for the future to answer. For the medium term, the novel task before Fed watchers will be to decipher the central bank’s emerging reaction function under its maverick new chairman. In the meantime, I believe the most hawkish-sounding Fed chairman in a generation has restored the credibility of Fed independence along with burnishing his inflation-fighting stripes, and he knows it. Barring inflationary unknown unknowns, that credibility will likely serve as tightening itself, allowing Chairman Warsh to deliver zero hikes in 2026.”