Thorne Slams Warsh's Rate Hike Response as 'Same Old Playbook'

James Thorne, Chief Market Strategist at Wellington Altus, is criticizing Federal Reserve Chair Kevin Warsh's handling of the recent rate hike. According to Thorne, Warsh has failed his first test as Fed chair by reacting to 'inflation headlines, prediction-market pricing, and superficial strength in aggregate data.'

The rate hike was a 25-basis-point increase to a range of 3.75%-4.00%, the first rise since 2023. Thorne argues that Warsh's response is not a departure from his predecessors' policies.

Thorne specifically pointed out that Warsh never acknowledged that an oil supply shock functions as 'a tax on growth.' He warned that hiking interest rates during such a shock risks turning a temporary price-level increase into recession.