Kevin Warsh: Inflation is an option for the Federal Reserve; he advocates for a combination of interest rate cuts and balance sheet reduction.

In market predictions, Kevin Warsh's chances of becoming the next Federal Reserve Chairman have risen to first place. A Deutsche Bank research report points out that if Warsh is elected, he may support both interest rate cuts and quantitative easing (QT) in parallel, but only if regulatory reforms can reduce the banking system's demand for reserves. Warsh believes that "inflation is an option," rooted in the Fed's policy decisions, not in supply chains or geopolitics. He calls for the Fed to return to its core mission of maintaining price stability and is optimistic about the productivity explosion brought about by AI and deregulation. Warsh served as a Federal Reserve Governor from 2006 to 2011 and has long been a critic of quantitative easing. He is currently a partner at the Duquesne Family Office, a visiting scholar at the Hoover Institution, and a lecturer at Stanford Business School. (Wall Street News)