Institution: Wash's statement has shown a tendency toward interest rate cuts

Golden Finance reported that on April 22, a CICC research report said that Kevin Waush, the nominee for the chair of the Federal Reserve, appeared before the Senate Banking Committee hearing and revealed a core policy proposition of “balance sheet reduction and rate cuts running in parallel.” In terms of the balance sheet, he clearly opposed normalizing quantitative easing (QE) at the level of the balance sheet; he advocated a gradual and orderly approach to shrink the Fed’s balance sheet size, to exit fiscal-like responsibilities, and to return the Fed to a monetary-policy-first role. In terms of interest rates, although he did not make any explicit commitment, his remarks already showed a tendency toward rate cuts.

In our view, Waush’s policy stance is not only an adjustment to the monetary liquidity deployment mechanism, but also an extension in the monetary domain of the “America First” strategy amid the wave of de-globalization—from turning the world into a “global central bank” that endlessly delivers liquidity, to a new way of thinking that firmly controls the overall monetary spigot, focuses on domestic productive capacity, and emphasizes monetary sovereignty. We believe this shift means that the narrative of continuing dollar liquidity overspill will face revision, and assets that rely solely on liquidity-driven momentum—or that benefit from “dollar over-issuance”—may come under pressure.

(Jin10 )