Disappointment for some, relief for others as markets ponder Warsh’s nomination as next Fed chief

THE stock markets have shown a mixed reaction so far to the idea of a former US Federal Reserve governor as the central bank’s next chair and the successor to Jerome Powell. US President Donald Trump on Friday (Jan 30) nominated Kevin Warsh to head the Fed when Powell’s leadership term ends in May.

The choice of an old-school central banker was a bit of a disappointment for stock bulls because it makes interest-rate cuts less likely in the near term. But it was a relief to those who feared that the Fed would subordinate itself to the White House and undermine the financial system.

In recent weeks, the US dollar had weakened, while small stocks, gold, silver and Bitcoin had spiralled higher in anticipation of a Fed nominee who would acquiesce to Trump’s constant demands for rate cuts.