Walsh Takes Over the Fed! Analyzing the New Direction for U.S. Treasuries and Monetary Policy After Powell Steps Down

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Author: Kurumi, Crypto City The US Senate officially confirms Kevin Warsh to lead the Fed The US Senate recently officially confirmed former Fed Governor Kevin Warsh as the new Fed Chair, succeeding the outgoing Jerome Powell. Given Warsh's long-standing relatively open attitude toward digital assets and financial innovation, the news immediately drew significant attention from both the cryptocurrency market and Wall Street. Kevin Warsh previously served as a Fed Governor during the 2008 financial crisis and also worked at Morgan Stanley, possessing a deep background in Wall Street and monetary policy. In recent years, he has repeatedly criticized the Fed for excessively expanding its balance sheet and questioned whether maintaining long-term high-liquidity policies might exacerbate US fiscal and inflation risks. Market participants believe that after Warsh takes office, the Fed's policy style may lean more hawkish and fiscal-discipline-oriented compared to the Powell era. High interest rates and US debt pressure become the new Chair's primary challenges Currently, the US national debt has exceeded $40 trillion, and the high-interest-rate environment has caused federal government interest expenses to continue climbing. It is widely believed in the market that Warsh will face immense pressure upon taking office, as he must strike a balance between controlling inflation, maintaining economic growth, and stabilizing the US Treasury market. Warsh has previously argued that the Fed should rebuild market trust in the USD and monetary policy, avoiding over-reliance on quantitative easing and long-term low-interest-rate policies. He has also criticized the overly close relationship between the Fed and the Treasury Department, arguing that this may weaken market discipline. Analysts point out that compared to Powell's style, which favored market stability and gradual adjustments, Warsh emphasizes curbing inflation and restoring fiscal discipline; therefore, the Fed's future stance on interest rate cuts may become more conservative. Cryptocurrency market watches for new Fed policy direction Because Warsh has publicly discussed Bitcoin and financial innovation, the cryptocurrency market has been quite sensitive to this personnel appointment. Some investors believe that if the Fed's attitude toward the digital asset industry becomes more open in the future, it will help establish a more stable cooperative relationship between the banking system and the cryptocurrency market. Especially with the rapid growth of stablecoin legislation, bank digital asset services, and the ETF market in the US in recent years, the importance of the Fed Chair's stance continues to rise. However, the market is also concerned that Warsh's hawkish monetary policy stance could keep interest rates higher for longer, further suppressing the performance of risk assets. Bitcoin has been highly correlated with the US liquidity environment over the past few years, so the Fed's future policy direction will remain one of the key indicators for the crypto market to watch. (The above content is excerpted and reprinted with authorization from our partner "Crypto City", original link )

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