What are the US markets expecting from the new Fed chairman?

With the US economy facing many crossroads, the market is hoping that the views and actions of the new Fed chairman will not create further shocks and will alleviate concerns about sudden changes in operating procedures. Over the past three days, the US press has reflected developments and rather cautious assessments from the market and investors regarding the new Fed chairman nominee.

CBS News reported that on Friday's trading session, the US financial markets saw little significant change. However, money was withdrawn from safe-haven assets such as gold and silver. This suggests that investor sentiment was somewhat reassured by President Trump's decision to choose a familiar face like Kevin Warsh to replace the current Federal Reserve Chairman.

Thị trường Mỹ chờ đợi điều gì từ Chủ tịch FED mới? - Ảnh 1. — Kevin Warsh - Photo: AP

Market Watch, citing experts, reported that the nomination of Kevin Warsh helped avoid many worst-case scenarios, but his actual impact on the interest rate trajectory remains unclear. Currently, the bond market suggests that the Fed's interest rate path under Chairman Jerome Powell is the most appropriate approach to managing risk.

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The US asserts that its economy continues to grow despite the conflict with Iran.The US Treasury Secretary stated that the US economy has grown by 2.6% in the last four quarters, despite challenges arising from domestic political situations and international security developments.

Three major questions facing investors right now are: How many more interest rate cuts will there be? Will the Fed's independence remain intact? What will be the direction of monetary policy?

Reuters noted that Kevin Warsh had supported tight monetary policy during his time as Federal Reserve Governor from 2006-2011, but recently he suggested that President Donald Trump was justified in pushing for interest rate cuts.

However, according to analysts, the decision to nominate Kevin Warsh is seen as a reassuring factor for the market, as he is still considered an independent thinker, contrary to previous concerns about the Fed being too heavily influenced by politics .

According to CBS News, the selection of a new Fed chairman adds further uncertainty to financial markets. Kevin Warsh has previously called for adjustments to the Fed's monetary policy framework, including shrinking the central bank's balance sheet to free up liquidity and make it easier for households and small businesses to access loans.

In the current context, investors are expecting the Fed to maintain its independence, control inflation, and ensure the stability of the financial system. These will be important benchmarks for its new term.