[Gianluca Benigno] A new Federal Reserve playbook?

The air in financial markets is thick with anticipation, and it seems a significant shift is on the horizon for the US Federal Reserve. Market expectations are now firmly pointing towards a rate cut at the Fed’s December meeting, a move that, while potentially welcomed by many, is almost certainly going to spark some internal dissents.

But the plot thickens beyond just monetary policy. The announcement of who will lead the Fed as its new chair has been unexpectedly postponed, pushing the reveal into January. This delay has sent ripples across prediction markets like Polymarket, where probabilities for “no announcement by Dec. 31” have promptly adjusted. Among the potential contenders, Kevin Hassett seems to be gaining traction, leading the pack in these speculative odds.

It’s no secret that the incoming administration has a clear preference for lower interest rates – a stance that could significantly influence the Fed’s direction, especially with a new chair at the helm. However, the implications of these developments stretch far beyond mere near-term policy adjustments. We could be witnessing the preliminary pages of an entirely new playbook for the Federal Reserve, one that reshapes its independence, its approach to inflation, and its role in the broader economy. The stakes, in short, couldn’t be higher.

Source: Original Article