Fed Chair Nominee Warsh says the Fed's balance sheet has played an unhelpful role in achieving the dual mandate and prefers using interest rates as a dominant force; if we were to cut rates, a broader range of people would benefit
Importance
Level 1
- Working with Treasury Secretary and need to make Fed's balance sheet smaller. So need a smaller balance sheet slowly and deliberately.
- Too many Fed officials opine on rates in advance, and that's unhelpful.
- Don't know the state of AI and geopolitics, and rates need to be based on better data and forward looking; need debate inside the FOMC.
- Tends to favour messier meetings and family fights and you won't pre-decide where rates should be.
- If the Fed did a series of policy reforms, inflation can be lower and the economy stronger.
- The Fed is not blameless for divergence between those with assets and those without.
- Smaller balance sheet would mean rates could lower, inflation better, and the economy stronger.