Market Splits on Powell Successor Noh: Fed Independence Concerns Rise, Rate-Cut and Balance Sheet Paths Unclear

Gate News message, April 28 — Following Kevin Noh's nomination hearing, market expectations for his potential future direction at the Federal Reserve have diverged sharply, according to a new CNBC survey of 26 economists, strategists, and analysts.

Only 50% of respondents believe Noh can maintain strong policy independence, while 46% view his independence as limited or lacking. However, this represents a 13 percentage point increase from the previous month, suggesting his hearing testimony has somewhat eased market concerns. Regarding policy outlook, 58% of respondents characterize Noh as dovish, expecting him to favor rate cuts, while 65% simultaneously believe he will adopt a hawkish stance on balance sheet reduction, accelerating the Fed's asset portfolio compression.

Market participants are particularly focused on Noh's prior comments about "coordinating asset and liability management between the Treasury and the Federal Reserve." Analysts warn this could undermine the fiscal-monetary policy separation framework established in 1951, potentially eroding the Fed's long-standing independence foundation.

Regarding the Fed's current $6.7 trillion asset base, 41% of respondents expect balance sheet reduction of approximately $800 billion in Noh's first year, though 46% believe such measures would be difficult to implement in the near term. Additionally, on AI's impact on inflation and productivity, while Noh advocates for preemptive policy adjustments rather than waiting for data confirmation, 81% of surveyed experts contend the Fed should remain grounded in actual economic data; AI's potential long-term deflationary effects are insufficient to justify a rapid pivot to loose policy in the near term.