The next chairman of the Federal Reserve has changed! Walsh's policy proposal: interest rate cut+balance sheet reduction The candidate for the next chairman of the Federal Reserve has changed, with former director Kevin Warsh becoming a popular candidate nominated by Trump's confidants, competing with the previously leading Kevin Hassett. Walsh's policy proposal presents a unique combination of "interest rate cuts+balance sheet reduction", which has attracted market attention. Core Content Analysis: Contradictory policy proposals: • Interest rate cutting tendency: Walsh's recent support for lowering interest rates may be related to Trump's political demand to pressure the Federal Reserve to significantly cut interest rates. Shrinking balance sheet hawks: He has long criticized the Federal Reserve's quantitative easing (QE) policy, advocating for a reduction in the balance sheet, believing that excessive easing can trigger inflation and financial risks. 2 Feasibility disputes: Deutsche Bank pointed out that "cutting interest rates and reducing balance sheets in parallel" relies on regulatory reforms to reduce the demand for bank reserves, which is difficult to implement in the short term. If elected, Walsh may push for reform of the Federal Reserve research team, focusing more on money supply rather than traditional DSGE models. 3 Independence Challenges: The pressure for Trump's intervention in the Federal Reserve has intensified, and the new chairman needs to balance political demands with policy independence. Walsh's resume spans across the political, business, and academic circles, but opinions within the Federal Reserve Board are divided, and policy shifts may need to be gradually pushed forward. 4 Market impact: Short term focus on the poor policy expectations after the selection of candidates, and long-term observation of whether the Federal Reserve can find a new balance between inflation targets and financial stability.