CdM | US President Donald Trump believes that Kevin Warsh, his nominee for chairman of the Federal Reserve (Fed), can boost the country’s economy to grow at a rate of 15%.
He made this statement in an interview on Fox Business, in which he made it clear that if Warsh ‘does the job he is capable of doing,’ the US ‘can grow at 15%, I think even more.’ ‘I think he’s going to be great, and he’s a person of great quality.’
With this forecast, Trump is showing great optimism, as in the third quarter, the country’s GDP was revised upwards to a 4.4% year-on-year increase to ‘reflect increases in consumer spending, exports, government spending and investment’.
The president also acknowledged that he would not have chosen Warsh to chair the Fed if he had advocated raising interest rates. Trump has already had a tense relationship with the current head of the central bank, Jerome Powell, for refusing to accelerate rate cuts.
However, analysts believe that with Warsh at the helm, the Fed could opt for a more cautious approach, i.e., keeping rates high for longer to ensure that inflation is fully under control, even at the cost of cooling economic growth.
‘Warsh is not promising quick cuts. He is promising a process. The signal here is neither moderate nor aggressive in the typical sense of the word. It is institutional. It indicates that the Fed remains a central bank, not a political shortcut,’ says Stephen Innes, managing partner at SPI Asset Management.
