Philip Wee at DBS Group Research discusses how Federal Reserve (Fed) leadership dynamics are influencing United States (US) markets and the US Dollar (USD). The Department of Justice's (DOJ) decision to drop its criminal probe into Jerome Powell has paved the way for Kevin Warsh’s confirmation, which markets view as dovish. Powell’s final Federal Open Market Committee (FOMC) press conference is expected to focus on whether he will stay as Governor until 2028.

Powell exit risk and Warsh tilt

"The US Department of Justice’s (DOJ) decision on April 24 to drop its criminal probe into Fed Chair Jerome Powell has technically fulfilled Republican Senator Thom Tillis’ demand to support Kevin Warsh’s confirmation."

"While the DOJ technically signalled a retreat by referring the USD2.5 billion Fed HQ renovation probe to the Fed’s Office of Inspector General (OIG), in line with Powell’s request, the resolution remains fragile."

"The Senate Banking Committee should confirm Warsh as Powell’s successor at a scheduled confirmation vote on April 29 at 10:00 AM ET, hours before the FOMC’s interest rate decision."

"Warsh’s nomination had a dovish tilt, helping US equities hit new record highs over the past week despite Brent crude prices returning above $100 per barrel."

"Powell’s final FOMC press conference as Chair will likely be dominated by the question of whether he intends to remain as Governor until January 2028."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)