Markets watch Fed independence closely after Kevin Warsh nomination

BlockBeats, April 28 — A CNBC survey shows investors and economists remain split on whether Federal Reserve policy would stay independent under Kevin Warsh if he were to lead the central bank, even as concerns eased modestly after his nomination hearing. The poll of 26 economists, strategists and analysts found 50% think Warsh could preserve a high degree of policy independence, while 46% said his independence would be limited or effectively absent. The share affirming his independence rose 13 percentage points from last month, suggesting his hearing remarks helped calm some market unease. On the policy outlook, 58% of respondents described Warsh as broadly "dovish" and inclined toward rate cuts. At the same time, 65% expect him to be "hawkish" on balance-sheet reduction, favoring a faster pace of quantitative tightening. Attention is centered on Warsh's earlier comments about "recoordinating balance sheet management between the Treasury and the Federal Reserve." Analysts cautioned that such an approach could weaken the fiscal-monetary separation framework established in 1951 and chip away at the long-standing foundations of Fed independence. With the Fed's balance sheet currently around $6.7 trillion, 41% expect the first year of runoff under Warsh could total roughly $800 billion, while 46% said meaningful progress would be difficult in the near term. On artificial intelligence and its implications for inflation and productivity, Warsh has argued for policy to be planned proactively rather than waiting for data confirmation. The survey found 81% still favor a data-dependent Fed, saying AI's long-term deflationary potential is unlikely to be large enough in the short run to justify a rapid shift toward easier policy.