Key Points :
Dramatic Rate Cut Prediction: Economist Robin Brooks forecasts that Kevin Warsh, if appointed Fed Chair, could cut interest rates by 100 basis points (1%) between June and October 2026—far more than the 40 basis points markets currently expect.
Pre-Election Timing: This aggressive easing would conclude just before the November 2026 mid-term elections, potentially lowering the benchmark rate to 2.5%-2.75%.
Market Turbulence & Crypto Link: Fears of a slower-cutting "hawkish" Warsh recently triggered a sell-off, with Bitcoin falling below $75K and precious metals tumbling. Brooks argues these fears are a "mistaken impression" and that such deep cuts could instead boost crypto and weaken the U.S. dollar.
Political Pressure & Justification: Warsh is seen as unlikely to resist pressure from Trump, who historically criticized the Fed for slow rate cuts. He may justify easing by pointing to AI-driven productivity gains as a disinflationary force.
Contradictory Risk: Analysts note a tension: while Warsh may cut rates aggressively, his known desire to shrink the Fed's balance sheet could simultaneously drain crucial liquidity from the financial system.
