Powell’s Final FOMC: Grading His Wins, Losses, and the Mixed Bag He Leaves for Trump’s Fed Pick Kevin Warsh

Jerome Powell is concluding his eight-year tenure as Federal Reserve Chair with interest rates at 3.50-3.75% and inflation at 3.3%. His successor, Kevin Warsh, faces significant challenges including an oil-driven CPI spike, a large balance sheet, and a crypto market heavily influenced by Fed liquidity.

Powell inherited a stable economy from Janet Yellen but navigated the pandemic shutdown, a historic balance sheet expansion, high inflation, and regional bank failures. His key wins include the Fed's swift response to the 2020 pandemic with emergency lending, which supported markets and Bitcoin's rise, and his aggressive rate-hiking cycle that has so far avoided a deep recession. He also shifted the Fed's tone on digital assets, calling Bitcoin a competitor to gold.

However, Powell's tenure is marked by criticism over the "transitory" inflation call in 2021, leading to a delayed start to rate hikes and forcing aggressive tightening. This pace contributed to the failure of three regional banks in March 2023. Communication missteps and a DOJ probe also added to the challenges.

Warsh is set to inherit a Fed with tighter liquidity and rising inflation forecasts. He has signaled a desire for a "different, new inflation framework," a smaller balance sheet, and potentially a faster quantitative tightening approach. For crypto markets, Warsh presents a paradox: hawkish on inflation but more favorable towards digital assets, having called Bitcoin a "sustainable store of value" and disclosing significant crypto holdings. This creates uncertainty for risk assets, balancing hawkish liquidity policy against a potentially friendlier stance on Bitcoin.

(Source：BeInCrypto)