Marcin Frąckiewicz

May 3, 2026, 12:29 AM EDT. Kevin Warsh, likely successor to Jerome Powell as Federal Reserve chair, advocates a tougher stance on inflation, aiming for a strict 2% Personal Consumption Expenditures (PCE) price index target. Unlike Powell's gradual approach, Warsh favors aggressive reduction of the Fed's $6.8 trillion balance sheet, signaling a shift away from cushioning asset prices - often called the 'Fed put.' His approach prioritizes price stability over growth and employment support, potentially allowing slower economic growth and higher unemployment to tame inflation expectations. This new Fed strategy may push Treasury yields higher and pressure growth stocks, unsettling markets used to Fed intervention during downturns.