🔥 The Federal Reserve is about to welcome the 'hawkish helmsman'! Will rate cuts and balance sheet reduction come at the same time?
Breaking news: Trump officially nominates Kevin Walsh as the next Federal Reserve Chair! This 'jack-of-all-trades,' with experience on Wall Street, policy in the White House, and a record at the Federal Reserve, is likely to become a key figure in reshaping the monetary direction for the coming years. #下任美联储主席会是谁？
The market immediately captured the key contradiction: although Walsh supports rate cuts, he has a very hard stance on balance sheet reduction. A Deutsche Bank report pointed out that if he takes office, he may push for a rare policy combination of 'rate cuts and balance sheet reduction in parallel'—provided that regulatory reforms can lower bank reserve requirements, but the feasibility of this in the short term is questionable. #美联储维持利率不变
What does this mean?
The traditional script is 'stop balance sheet reduction first, then cut rates,' but the Walsh model may break the norm, creating a complex situation of 'injecting liquidity while withdrawing liquidity.' The liquidity environment will not simply shift to ease, but will enter a more refined and unpredictable 'deep control zone.'
For the market, personnel changes are not just about changing people but also about switching monetary logic. When hawks are at the helm, even if rates are cut, it may be accompanied by liquidity contraction, amplifying the volatility of traditional assets.
Every power transition is a moment for capital to reposition itself. This time, are you ready to face the dual storm of 'rate cuts + balance sheet reduction'?
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