Fed's three choices as new chair Warsh's honeymoon ends - Bloomberg analysis

Jonathan Levin / Bloomberg

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The Warsh-Trump honeymoon is officially over.(Sept 9): With a week until a key Federal Reserve (Fed) meeting, US President Donald Trump has lobbed his first threat at Kevin Warsh, the new chair he put...

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Bloomberg analysis\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-09-09 09:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.theedgesingapore.com/news/us-economy/feds-three-choices-new-chair-warshs-honeymoon-ends--bloomberg-analysis?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS><strong>Jonathan Levin / Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The Warsh-Trump honeymoon is officially over.(Sept 9): With a week until a key Federal Reserve (Fed) meeting, US President Donald Trump has lobbed his first threat at Kevin Warsh, the new chair he put...</p>\n\n<a href=\"https://www.theedgesingapore.com/news/us-economy/feds-three-choices-new-chair-warshs-honeymoon-ends--bloomberg-analysis?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"XLRI","symbol_name":"The Real Estate Select Sector SPDR Premium Income Fund","start_time":0,"source_url":"https://www.theedgesingapore.com/news/us-economy/feds-three-choices-new-chair-warshs-honeymoon-ends--bloomberg-analysis?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS","article_id":"2666581855","we_media_id":null,"thumbnails":[],"rights":{"source":"edge_highlight","url":"https://www.theedgesingapore.com/news/us-economy/feds-three-choices-new-chair-warshs-honeymoon-ends--bloomberg-analysis?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2666581855","pubTimestamp":1788918077,"columns":[],"sourceInfo":{"source_id":"edge_highlight","name":"Edge"},"weMediaInfo":null,"summary":"The Warsh-Trump honeymoon is officially over.","collect":0,"end_time":0,"defaultTopTitle":"theedgesingapore.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"XLRI":"The Real Estate Select Sector SPDR Premium Income Fund","GOVT":"iShares安硕核心美国国债ETF","VCIT":"美国中期公司债-Vanguard","SHV":"美国短期国债ETF-iShares","USHY":"iShares Broad USD High Yield Corporate Bond ETF","VGLT":"美国长期国债ETF-Vanguard","XBIL":"US Treasury 6 Month Bill ETF","GOLY":"Strategy Shares Gold Enhanced Yield ETF","TLH":"iShares安硕10-20年国债ETF","TBIL":"US Treasury 3 Month Bill ETF","GBIL":"Goldman Sachs Access Treasury 0-1 Year ETF","WAMA":"WisdomTree U.S. Adaptive Moving Average Fund","SHY":"债券指数ETF-iShares Barclays 1-3年国债","MYCN":"SPDR SSGA My2034 Corporate Bond ETF","LQD":"债券指数ETF-iShares iBoxx投资级公司债","UBT":"债券20+美国债-ProShares两倍做多","BOND":"Pimco Total Return ETF","AGG":"债券指数ETF-iShares Barclays综合国债","MUNX":"AMG GW&K Muni Income ETF","TMF":"3倍做多20年期以上国债ETF-Direxion","CIVG":"Corgi 1-5 Year Investment Grade Corporate Bond ETF","PBDC":"Putnam Bdc Income ETF","ZROZ":"PIMCO 25+ Year Zero Coupon U.S","SKRE":"TUTTLE CAPITAL DAILY 2X INVERSE REGIONAL BANKS ETF","MUB":"美国市政债ETF-iShares","TYO":"3倍做空7-10年期国债ETF-Direxion","OOQB":"One+One Bitcoin and Ether ETF","EDV":"美国延期国债ETF-Vanguard","VCSH":"美国短期公司债-Vanguard","JPST":"JPMorgan Ultra-Short Income ETF","NGHT":"Nicholas Bitcoin and Treasuries AfterDark ETF","BND":"债券指数ETF-Vanguard美国","TBT":"债券20+美国债指数ETF-ProShares两倍做空","KBE":"银行指数ETF-SPDR KBW","TIP":"通胀债券指数ETF-iShares Barclays","TLTW":"iShares 20+ Year Treasury Bond Buywrite Strategy ETF","IEI":"iShares Barclays 3-7 Year Trea","UUP":"美元ETF-PowerShares DB","UDN":"做空美元指数-PowerShares","BSV":"短期国债指数ETF-Vanguard","VGSH":"美国短期国债ETF-Vanguard","BIL":"债券指数ETF-SPDR Barclays美国1-3月国债","DBND":"DoubleLine Opportunistic Bond ETF","FAZ":"三倍做空金融ETF-Direxion","LIAJ":"LifeX 2053 Inflation-Protected Longevity Income ETF","HYG":"债券指数ETF-iShares iBoxx高收益公司债","SCHO":"嘉信短期美国国债ETF","MINT":"PIMCO Enhanced Short Maturity Exchange-Traded Fund","BOXX":"ALPHA ARCHITECT 1-3 MONTH BOX ETF","VGIT":"中期国债ETF-Vanguard"},"translate_title":"新任主席沃什蜜月期结束，美联储有三个选择 - 彭博分析","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DBND":1.5,"SKRE":1.5,"TIP":1.5,"CIVG":1.5,"MYCN":1.5,"UDN":1.5,"IEI":1.5,"LIAJ":1.5,"VGSH":1.5,"TYO":1.5,"TLTW":1.5,"LQD":1.5,"BSV":1.5,"KBE":1.5,"VCIT":1.5,"XLRI":1.5,"BND":1.5,"VGLT":1.5,"XBIL":1.5,"TMF":1.5,"PBDC":1.5,"AGG":1.5,"VGIT":1.5,"JPST":1.5,"OOQB":1.5,"SHY":1.5,"UBT":1.5,"GOLY":1.5,"BIL":1.5,"EDV":1.5,"ZROZ":1.5,"HYG":1.5,"BOND":1.5,"TBIL":1.5,"SHV":1.5,"SCHO":1.5,"MUNX":1.5,"UUP":1.5,"VCSH":1.5,"TBT":1.5,"NGHT":1.5,"USHY":1.5,"FAZ":1.5,"GOVT":1.5,"BOXX":1.5,"TLH":1.5,"GBIL":1.5,"MUB":1.5,"MINT":1.5,"WAMA":1.5},"content_text":"The Warsh-Trump honeymoon is officially over.(Sept 9): With a week until a key Federal Reserve (Fed) meeting, US President Donald Trump has lobbed his first threat at Kevin Warsh, the new chair he put on the job. \"The Fed board, with its great new leader, must get smart - be patriots for a change,\" he posted last Friday, urging policymakers to cut interest rates even as the market sees better-than-even odds of a hike to counter inflation. Trump added: \"High interest rates put the US at a very unfair disadvantage, and I won't allow that to happen!\"\nThe Warsh-Trump honeymoon is officially over. Investors shrugged off Trump's latest tirade, perhaps betting that the legal system will protect the Fed's operational independence; that distributed power on the rate-setting committee will help it resist coercion; and that Democratic Party gains in the November midterms could hem in the president. Even if all that is true, Trump's misguided comments sully the Fed's reputation, and perceptions matter for inflation, a psychological phenomenon in which consumer expectations and reality feed upon one another. \nObservers should worry about the pernicious deterioration of the Fed's approval scores in the court of public opinion. Part of that is about too-high inflation, but the Fed is less popular today than after the financial crisis or the peak of inflation in 2022. In the latest Gallup survey from September 2025, just 33% of US adults thought the Fed board was doing an \"excellent\" or \"good\" job, while 27% said policymakers were doing a \"poor\" job - a net positive rating of just 6%, the lowest in surveys conducted intermittently since at least 2003.\nAmericans must not shrug off the damage that the president's persistent attacks on the Fed, beginning under Warsh's predecessor Jerome Powell, are doing to one of the country's most important institutions. Inflation is eating away at Americans' hard-earned wage gains, and people consistently put affordability among their top concerns. A well-respected, independent Fed is their best hope for better outcomes ahead.\n\nThe scenarios heading into the next Fed meeting illustrate how big a bind Trump has created for policymakers.\nScenario 1: Fed hikes without Warsh\nA close reading of Trump's recent Truth Social posts suggests he may still think of Warsh, the Fed's \"great new leader,\" as being on his side - a MAGA warrior saddled with the challenging task of shepherding the Fed's wayward institutionalists. Short of some miracle disinflation in the next consumer price index report due Friday, that interpretation cracks the door open to policymakers raising rates without Warsh. Could it happen?\nThree of 12 voters dissented from the last decision to hold, preferring to raise rates (Federal Reserve Bank of Cleveland president Beth Hammack, Federal Reserve Bank of Minneapolis president Neel Kashkari and Federal Reserve Bank of Dallas president Lorie Logan). Others, including governors Lisa Cook, Michael Barr and Christopher Waller, have since said they are open to potentially tightening policy depending on developments in the data. \nAs Bianco Research's Jim Bianco has noted, former chair Powell has been radio silent since leaving the top post. Powell bucked convention by staying on the Fed board after his chairmanship to guard against ongoing threats to the Fed's independence. It isn't crazy to think he might seize an opportunity to make a difference by joining a hawkish bloc in voting to lift rates.\nA Fed rebellion against the chair would not be pretty. The Federal Open Market Committee has never voted against the chair in a rate decision in the modern era, and it hasn't done so on any other substantive policy question since the chairmanship of Marriner Eccles in 1939. Doing so would trigger a crisis of leadership. The markets and public would perceive an unpredictable tug-of-war for control of the institution, and rates markets and bond yields would become more volatile. \nScenario 2: Policymakers stay on hold\nThen there's the status quo: The Fed holds rates at 3.5%-3.75%, probably with dissents. In this scenario, the public will assume politics are driving policy ahead of the Nov 3 midterm elections, and Trump's Truth Social post will be Exhibit A.\nIsn't it best to avoid poking the bear (ahem, the president) during this politically important season? \nNo. As Bloomberg Opinion's Claudia Sahm wrote on Monday, \"appeasement is not a strategy that works with the Trump administration\", a reminder of how Barr resigned as the vice-chair for supervision to placate the new administration in early 2025, and how the administration went after the institution anyway, escalating at every turn.\nMarkets have repeatedly punished policymakers when investors thought they were going too easy on inflation. Yields on 10-year Treasury notes, which influence borrowing costs throughout the economy, surged by about 1.15 percentage point from the time the Fed started cutting rates in late 2024 to January 2025. Yields also surged in 2023 when the Fed stopped hiking even as some investors speculated that they should have gone further.\n\nInflation measured by the personal consumption expenditures (PCE) deflator is running at 3.7%, nearly twice the Fed's 2% target, which it has now exceeded for five and a half years. Although inflation peaked in 2022, progress has effectively stalled since late 2024, and even an encouraging inflation report on Friday wouldn't alter the interpretation. The lingering problem is widespread, with well over half of PCE components still increasing at more than a 3% pace in the past year.\nA few common excuses are made for the elevated headline inflation figure: It's just an energy shock (from the US-Israel war with Iran) or it's just the surging prices of computer equipment (from the artificial intelligence build-out). But the Trump administration has overseen one shock after the next - shocks are the new normal - and the Fed's challenge is to keep the public's faith in stable prices through it all. \nIgnore that, and policymakers may find that the price of staying in good standing with the White House is falling out of favour with the bond market.\nScenario 3: Warsh supports a hike\nAt the time of writing, swaps and futures markets imply roughly 60% odds that the Fed will lift rates to 3.75%-4% in its Sept 16 decision. Even without knowing the outcome of Friday's inflation report, this is almost certainly what should happen. \n\"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,\" Warsh said in his excellent, and resoundingly hawkish, address in Jackson Hole last month. \"Otherwise, we have work to do,\" he added. \nFollowing through will take backbone. The White House response is likely to include social media insults, redoubled efforts to try to weaponise the legal system against the central bank, and even new economic interventions. In his post last Friday, Trump made an alarming threat to cut off trade with countries with which the US has a trade deficit if the Fed didn't cut rates, which amounts to a puzzling conflation of two completely unrelated issues. Absurd as that would be, one shouldn't doubt Trump's capacity to execute on the preposterous. With two more years of Trump's attacks, the Fed's approval numbers may get worse before they get better.\nBut Fed policymakers should \"be patriots\" and protect their integrity in the face of a public defamation campaign. And the best of their bad options for doing so is to tune out the noise and do what's right: Lift rates next week, with Warsh leading the charge.\nUploaded by Tham Yek Lee","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}