The Dividend Cafe All About the Next Fed Chair Kevin Warsh
Feb 6, 2026
Discussion of Kevin Warsh’s selection as the next Federal Reserve chair and what his background and credibility mean for monetary policy. Exploration of his reform-minded philosophy, including ideas to reduce the Fed’s balance sheet footprint. Conversation about likely interest rate moves, QE critique, market signals as policy inputs, and the potential path through confirmation and regulatory shifts.
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Prepare For Moderate Rate Cuts
- Expect rate cuts under Warsh, likely down to roughly 2.75% this year.
- Bahnsen advises that 50–75 bps more cuts would be reasonable and not inconsistent with price stability.
QE Mission Creep Was Harmful
- Warsh criticized QE mission creep from liquidity tool to permanent rate suppression.
- Bahnsen agrees QE's expansion fostered excess risk-taking and fiscal borrowing.
Balance Sheet Unwinding Is Possible But Tricky
- The Fed reduced its balance sheet materially without major market disruption recently, but large cuts remain hard.
- Bahnsen expects Warsh to prefer careful, incremental balance-sheet changes rather than rapid unwinding.