Institution: Wash's balance sheet reduction plan requires long-term preparation, and the pace of advancement is gradual.

Golden Finance reports that, according to a research report from CITIC Securities, on April 21, the U.S. Senate held a hearing on Waller’s nomination as the Chairman of the Federal Reserve. Waller’s remarks show that he is facing a difficult act of balancing. On the one hand, to a certain extent he needs to “please” Trump, so he has endorsed Trump’s say over interest rates; on the other hand, he needs to gain the trust of the market and within the Federal Reserve, so he emphasizes the mission of maintaining price stability and the Federal Reserve’s independence. Although Waller did not perform very well when answering questions from Democratic lawmakers, this is likely to have less impact on whether Waller can take over from Powell.
Whether Waller can succeed in passing the vote by the Senate Banking Committee depends on whether he can win the support of Republican Senator Tillis. We believe Trump will most likely TACO, and revoke the investigation into Powell, to help Waller pass the Senate vote. In the Q&A session, Waller emphasized that he would not become Trump’s “puppet,” and the market is leaning toward hawkish trading. Waller’s ideas about reforming the Federal Reserve deserve more attention from the market—especially his proposal that the Federal Reserve needs a new inflation framework and his criticism of how the Federal Reserve’s current forward guidance is presented. Waller emphasized that the Federal Reserve should shrink its balance sheet, with interest rates as the leading tool. However, we still believe that Waller’s balance sheet reduction plan needs a long period of preparation, and the pace of advancement will be gradual. (Zhitong Finance)