U.S. Fed nominee Kevin Warsh could trigger 100 bps of easing this year, economist warns

Brookings Institution economist Robin Brooks projects that if Kevin Warsh were installed as Fed chair the central bank could deliver an aggressive easing sequence concentrated between June and October, amounting to about 100 basis points in total. Brooks frames this as a reorientation toward a lower equilibrium real rate driven by structural productivity gains and disinflationary momentum rather than an emergent inflation shock. Market participants reacted quickly to nomination signals: bitcoin slid from the mid‑$80,000s to below $75,000 over the weekend, while gold and silver posted large one‑day declines, and the dollar strengthened as traders repriced both the near‑term path of policy and risk premia. That rapid repricing underlines fragile positioning across leveraged and speculative markets, which could amplify volatility if communications or confirmation risks evolve. Separate market indicators — including sharp moves in prediction‑market odds on platforms such as Polymarket and Kalshi — have crystallized expectations that Warsh is the leading candidate, but these same platforms and news reports also elevated the odds for other finalists, signaling continued uncertainty. Political and legal complications add another layer: a Justice Department inquiry tied to events in Washington has prompted at least one senator to signal a hold on support, making delays or contentious confirmation proceedings possible. Even if a Warsh chair is confirmed, internal Fed dynamics matter: incoming and rotating FOMC members with recent hawkish leanings are likely to resist rapid cuts, meaning any aggressive easing would require building internal consensus. Operational constraints also limit how quickly policy can be eased or the balance sheet reshaped — changes to reserve abundance, monthly bill purchases, or reinvestment plans interact with Treasury issuance patterns and money‑market plumbing, so sequencing would be critical to avoid tightening money‑market conditions unintentionally. The fiscal backdrop intensifies stakes: heavy short‑term Treasury issuance and a large near‑term rollover calendar raise the sensitivity of public finances to shifts in short‑ and long‑term yields. In sum, Brooks’ scenario is plausible in a narrow set of circumstances — a confirmed Warsh, persuasive growth‑and‑productivity evidence, and cooperative communications — but it faces substantial political, operational and committee‑level frictions that could delay, dilute or reverse the course he outlines. For investors, the episode highlights that early asset moves reflect a fast repricing of expectations but not a settled policy path; confirmation outcomes, FOMC voting dynamics, and concrete operational steps will determine whether the market’s recent volatility presages a durable regime change or a short‑lived overshoot.