Warsh Fails the Test: Oil Shock Sparks Concern Over Fed Policy

James Thorne, Chief Market Strategist at Wellington Altus, believes Federal Reserve Chair Kevin Warsh has failed to adapt to changing circumstances. In a post on X, Thorne argued that Warsh's recent actions show he is following the same playbook as his predecessors.

The rate hike and press conference are seen as evidence of this, with Thorne stating 'Meet the new boss, same as the old boss.'

Warsh's handling of the Iran-driven oil shock is particularly concerning for Thorne. He believes that Warsh never acknowledged the impact of an oil supply shock on growth, which he sees as a significant problem.

'The Fed cannot create oil supply, secure shipping routes or end a war with higher interest rates,' Thorne warned, predicting another rate hike in October and warning it could turn a temporary price-level increase into recession.