CICC Research Report: Warsh's Hearing Remarks Already Show Inclination Towards Rate Cuts

Odaily News CICC's research report states that Kevin Warsh, the nominee for Federal Reserve Chairman, attended a hearing before the Senate Banking Committee, revealing a core policy stance of pursuing "balance sheet reduction and interest rate cuts" in parallel. Regarding the balance sheet, he explicitly opposed the normalization of quantitative easing (QE), advocating for a gradual and orderly reduction in the scale of the Fed's assets, withdrawing from quasi-fiscal responsibilities, and returning it to its core monetary policy role. On the interest rate front, although no explicit commitment was made, his remarks already show an inclination towards rate cuts.

Warsh's policy stance is not only an adjustment to the monetary supply mechanism but also an extension of the "America First" strategy in the monetary sphere amid the wave of deglobalization. It represents a shift from being a "global central bank" that endlessly supplies liquidity worldwide to a new approach that firmly controls the total monetary gate, focuses on domestic productivity, and emphasizes monetary sovereignty. We believe this shift implies that the narrative of persistently excessive US dollar liquidity will face revision, and assets that rely solely on liquidity-driven factors and benefit from "excessive USD issuance" may come under pressure. (Jin10)