Wash Time Fed: Dove or Hawk? Institutional Forecast Views Summary

Last Friday, February 2nd, former President Trump nominated Kevin Wash as the next Chair of the Federal Reserve. Traders have since priced in two interest rate cuts from the Fed this year. Wall Street analysts shared varied takes on U.S. monetary policy under Wash’s tenure, summarized by BlockBeats below: **BlueBay Asset Management CIO Mark Dowding** The market broadly expects Wash to lean dovish, arguing AI-driven productivity gains will keep inflation in check. Futures markets still anticipate two Fed rate cuts this year. Compared to other potential candidates, Wash may be viewed as *less* dovish. **Sparta Capital Securities Chief Market Strategist Peter Cardillo** Wash has long been seen as hawkish, but recently he appears to align with Trump’s stance. Speculation suggests he won’t be swayed by the White House—he’ll remain cautious while striking a balance. **GlassRatner Advisory & Capital Group Managing Director Seth R Freeman** A top priority for Wash as Fed chair will be rebuilding global market credibility. Gold and silver prices dropped sharply after his nomination, signaling a stronger dollar and shifted market conditions. A lack of significant precious metals rebound next week would not surprise. Traders who bet heavily on these metals with a hawkish lean like Wash may face losses—especially those with unhedged or short positions. **10x Research Founder Markus Thielen** The market broadly sees Wash’s nomination as bearish for Bitcoin. He emphasizes monetary discipline, higher real interest rates, and reduced liquidity—framing crypto not as a hedge against currency devaluation, but as a speculative overreaction. As loose monetary policy unwinds, that overreaction will fade. From this lens, his approach could lead to higher unemployment, slower economic recovery, and elevated deflation risks in the 2020s. ### Wash’s Proposed Fed Policy Changes (from November 2023 article *“Fed Leadership Breakdown”*) 1. **Adjust Forecasts**: Ditch stagflation projections and recognize AI will drive real wage growth and improved living standards. 2. **Correct Inflation Understanding**: Acknowledge inflation stems from fiscal/monetary overissuance—not economic growth. 3. **Shrink Balance Sheet & Redeploy Funds**: Reduce the Fed’s balance sheet and redirect resources to households and small-to-medium-sized enterprises (SMEs). 4. **Reform Regulation**: Ease excessive small-bank rules to boost domestic credit growth.