Rabobank strategist says Kevin Warsh may avoid near-term easing, favoring a framework for cuts later in 2026.
Former Fed governor Kevin Warsh is expected to avoid advocating for immediate rate cuts, instead building a case for easing later in 2026, according to Rabobank analysis. The approach hinges on classifying current inflation as a supply shock, allowing the Fed to overlook headline figures if core inflation and expectations remain stable.
The strategy contrasts with market expectations for earlier cuts, citing Warsh’s productivity-driven argument, which some FOMC members reportedly question. Rabobank notes Powell’s March comments aligning with the supply-shock narrative, suggesting the committee may adopt a cautious, data-dependent stance.
If core inflation rises modestly and expectations stay anchored, the Fed could resume its pre-war easing path. However, persistent inflation pressures could delay action further, reinforcing a later timeline for rate reductions.