A Dovish Turn, With Guardrails Still Intact

With Kevin Warsh nominated to lead the Federal Reserve, this Capital Group analysis explores what a shift in leadership could mean for rates, growth, and policy credibility.

• Warsh signals openness to lower rates if inflation continues to ease, but outcomes remain data-dependent, anchored to labour market weakness rather than political pressure.

• Institutional checks, including the Fed’s board structure, reduce the likelihood of a sharp loss of independence despite heightened scrutiny.

• Beyond rate cuts, policymakers may deploy balance-sheet tools or Treasury market interventions if long-term yields threaten financing conditions.

How much room does the Fed really have to ease without unsettling markets? The full report examines the trade-offs facing monetary policy in 2026.