CNBC Fed Survey: Respondents Favor Kevin Warsh as Next Fed Chair Amidst Unprecedented Pressure

CNBC Fed Survey Findings

• 🎯 Respondents of the CNBC Fed Survey believe Kevin Hassett is the most likely pick for the next Fed chair, but they think Kevin Warsh should be chosen.
• 📊 The survey indicates that 70% of respondents expect Fed Chair Powell's upcoming speech to be neutral, neither hawkish nor dovish.
• 📈 Despite expectations of substantial price increases from tariffs (63%), 29% of respondents still anticipate two rate cuts this year.

Candidates for Fed Chair

• 📌 Kevin Hassett leads the list of potential presidential picks for Fed chair, followed by Fed Governor Chris Waller, Kevin Warsh, and James Bullard.
• 💡 However, when asked who the president should pick, respondents favored Warsh, with Waller and Bullard closely behind, while Hassett dropped to fourth.
• 🏛️ A significant portion of respondents (41%) believe the next Fed chair will conduct policy independently of the president, while 37% expect coordination, and 22% are unsure.

Powell's Speech and Economic Outlook

• 🗣️ 69% of respondents anticipate Powell's speech to be neutral, with 14% expecting a dovish tone and another 14% suggesting it might not focus on policy or the economy at all.
• 📉 Respondents foresee the Fed funds rate declining by 50 basis points this year (25 in September, 25 in December) and another 50 basis points next year.
• ⚠️ This outlook persists despite survey respondents forecasting inflation to remain around 3% this year and next, a full percentage point over the Fed's target.

Historical Context of Presidential Pressure

• ⚡ The discussion touches upon unprecedented public pressure on the Fed chair, contrasting it with historical instances like LBJ's physical confrontation with Fed Chair Martin.
• 🗣️ While public pressure is noted as unprecedented in the last 20-30 years, the extent of behind-the-scenes pressure from previous administrations remains unknown.
• 📉 The survey also highlights the potential impact of this pressure on the Federal Reserve's public reputation, with economic problems often being blamed on the Fed's interest rate policies.

Fed's Performance and Inflation Control

• 👏 One perspective highlights Fed Chair Powell's success in bringing down inflation without causing a recession and keeping inflation expectations under control.
• 📊 The challenge remains for Powell to justify rate cuts when inflation is running above target and is forecast to stay there, with the labor market being a key consideration.