CICC: Wash's statement has already shown a tendency toward interest rate cuts.

ME News report, April 22 (UTC+8): A China International Capital Corporation (CICC) research report said that Federal Reserve chair nominee Kevin Warsh attended a Senate Banking Committee hearing and revealed the core policy stance of “balance sheet reduction and rate cuts running in parallel.” On the balance sheet front, he clearly opposed making quantitative easing (QE) a normal practice, and advocated a gradual and orderly reduction of the Fed’s balance sheet size, exiting fiscal-like responsibilities so that it returns to monetary policy as the basis. On the interest-rate front, although he did not make any explicit commitment, his remarks already showed a tendency toward rate cuts.

In our view, Warsh’s policy stance is not only an adjustment to the monetary policy transmission mechanism, but also an extension of the “America First” strategy in the currency realm amid the wave of de-globalization—from a “global central bank” that endlessly supplies liquidity to the world, to a new approach that firmly controls the overall money supply, focuses on domestic productive capacity, and emphasizes monetary sovereignty. We believe this shift implies that the narrative of persistent flooding of dollar liquidity will need to be revised, and assets that rely solely on liquidity-driven growth, or those that benefit from “excess dollar issuance,” may face pressure. (Source: Jin10)