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As is known, US President Donald Trump announced Kevin Warsh as his nominee to replace Jerome Powell, whose term as FED chairman will expire in May.
While markets expected Kevin Warsh to implement a tighter monetary policy, economist Robin Brooks made the opposite prediction.
According to Coindesk, economist Robin Brooks claims that Kevin Warsh, Trump’s nominee for Fed Chairman, will cut interest rates by 100 basis points before the midterm elections.
This view contradicts Warsh’s hawkish stance and market concerns about its potential to lead to higher interest rates.
In his latest analysis, Brooks stated that he anticipates a 100 basis point interest rate cut at four meetings in June, July, September, and October following Warsh’s appointment.
According to Brooks’ latest forecast, the Fed’s borrowing interest rate could fall from the current 3.5%-3.75% range to 2.5%-2.75% before the midterm elections in November.
Brooks’s prediction of aggressive interest rate cuts could revive the bullish trend in Bitcoin and the broader cryptocurrency market. However, the reaction of BTC and cryptocurrencies since Warsh’s nomination was announced last Thursday raises significant concerns about how Warsh will view interest rate cuts.
Bitcoin fell from $84,500 on Thursday to below $75,000 over the weekend. At this point, fears of a more hawkish Fed, along with Washington’s stance, fueled a significant risk-aversion trend.
However, Brooks stated: “After last week, many people got the impression that Warsh would take a hawkish stance. He cannot and will not. In fact, his biggest nightmare is probably that Trump will turn his back on him, just as he did with Powell.”
*This is not investment advice.