Huatai Macro: Walsh May Attempt to Promote a Policy Combination of "Interest Rate Cuts + Balance Sheet Reduction"

Odaily Huatai Macro Research Report points out that on January 30th Beijing time, Trump announced the nomination of Kevin Walsh as the next Federal Reserve Chairman. Two possible changes under Walsh's tenure as Fed Chair include: 1) The Federal Reserve's related policy orientation may shift, with Walsh potentially attempting to promote a policy combination of "interest rate cuts + balance sheet reduction." 2) Communication with the President may become smoother. However, some fundamental logic and medium-term policy frameworks will not change: 1) The Trump administration's orientation of nurturing capital markets and broad liquidity remains unchanged, and the overall monetary policy stance will still be relatively accommodative (relative to economic strength). 2) In the medium term, the trend of the Federal Reserve's independence being eroded and the intrinsic value of the US dollar declining may not change. (Jin10)