Fed division poses early challenge for Warsh: JPMorgan

The unusual split among policymakers at the Federal Reserve represents an early challenge for Fed chair nominee Kevin Warsh, said Bob Michele, Chief Investment Officer at JPMorgan Asset Management.

At the Federal Open Market Committee (FOMC) meeting that concluded April 29, three members opposed the tone of the Fed’s statement, while Stephen Miran called for a quarter-point interest rate cut.

In an interview with Bloomberg on April 29, Michele said the divergence does not represent direct opposition to outgoing Fed Chair Jerome Powell but rather reflects growing concern within the central bank over inflationary pressures driven by higher energy prices.

Michele added that the conclusion of the Department of Justice’s investigation into Powell paved the way for Warsh to assume leadership of the Federal Reserve starting in mid-May.

The development could facilitate a smooth transition for the current chair, he noted.