Now that the DOJ has dropped its criminal investigation of the remodel cost overruns on the Federal Reserve’s HQ, Jerome Powell is preparing is to say “peace out”. Next week’s FOMC meeting will be his last as the 73 year old sunsets his eight year tenure as Fed Chair. Out with the old; in with the new.
A generation behind Powell, 56 year-old Kevin Warsh will be the first FOMC Big Cheese since 1979 to have a full head of non-graying hair. Don’t be fooled by his youth, Mr. Warsh has decades of experience at the Federal Reserve. He was the youngest person ever to be appointed to the Board of Governors at the age of 35.
With a spring in his step, he’s revamping antiquated repository calculations that have been in use since the last reset in the early 80’s. Notably, rather than relying on backward-looking pools of numbers for future guidance, the Fed will be homogenizing opinions and moving swiftly. The datasets that will be employed for guidance will be trimmed (much like Olympic scoring) by tossing aside the recent extremes, thereby allowing Governors to keep a level head and avoid economic whipsaws.
Don’t get too excited though about lower interest rates anytime soon. As of this morning, the market is statistically not pricing in any move lower by the Fed until October 2027. But as we know, the future of the global economy is currently dependent how the dispute over a 21 mile channel of ocean water is resolved. See what you can do with that, Kevin.
