What is the Fed's stance in the Woosh era: dovish or hawkish? Summary of institutional forecast opinions

BlockBeats News, February 2 — Last Friday, Trump nominated Waller to be the next Federal Reserve Chair, and traders are pricing in two rate cuts by the Fed this year. Wall Street investment bank analysts have shared their outlook on U.S. monetary policy during Waller’s tenure. Here is a summary from BlockBeats:

Chief Investment Officer Mark Dowding of BlueBay Asset Management stated that the market generally expects Kevin Waller to justify a dovish stance, advocating that productivity gains from artificial intelligence will keep inflation in check. Therefore, the futures market continues to anticipate two rate cuts by the Federal Reserve this year. Compared to other potential candidates, Waller may be seen as having a relatively weaker dovish stance.

Peter Cardillo, Chief Market Strategist at Spartan Capital Securities, said that Waller has traditionally been considered hawkish, but recently he seems to align more closely with Trump’s position. It is speculated that Waller will not be influenced by the White House, maintaining prudence and a certain balance.

Seth R Freeman, General Manager of GlassRatner Consulting and Capital Group, pointed out that one of Waller’s primary tasks as the newly nominated Fed Chair will be to rebuild global market credibility. Additionally, after Waller’s nomination was confirmed, gold and silver prices plummeted, indicating that the market will welcome a stronger dollar and a different environment. If precious metals do not rebound significantly next week, it should not be surprising. Waller’s hawkish tendencies and heavy positions in precious metals could lead to losses for traders, especially those with unhedged or short positions.

Markus Thielen, Founder of 10x Research, said, “The market generally views Waller’s election as bearish for Bitcoin because he emphasizes monetary discipline, higher real interest rates, and lower liquidity, which makes cryptocurrencies no longer seen as a hedge against currency devaluation but rather as speculative excess. When easy monetary policy exits, this excess will disappear. From this perspective, his approach could lead to higher unemployment, slower economic recovery, and greater deflation risks in the 2010s.”

Finally, Waller himself published an article titled “The Collapse of the Federal Reserve’s Leadership” last November. Waller proposed four changes that could shape his future policy philosophy:

1. Adjust Forecasts: Abandon stagflation predictions and recognize that AI will drive real wage growth and improve living standards.

2. Correct Inflation Perception: Acknowledge that inflation stems from fiscal and monetary overspending, not economic growth.

3. Reduce Balance Sheet and Reallocate Funds: Shrink the balance sheet and direct resources toward households and small to medium-sized enterprises.

4. Reform Regulatory Framework: Support easing excessive regulation on small banks to stimulate domestic credit growth.**