Warsh's Rate Hike Strategy Criticized as Oil Shock Looms

Chief Market Strategist at Wellington Altus James Thorne has criticized Federal Reserve Chair Kevin Warsh's handling of the recent rate hike, saying it shows the Fed's underlying policy approach hasn't changed under new leadership.

According to Thorne, Warsh will continue to react to 'inflation headlines, prediction-market pricing, and superficial strength in aggregate data.'

The Fed raised its benchmark rate 25 basis points to a range of 3.75%-4.00% on Wednesday, with all 12 voting members backing the move.

Thorne believes Warsh's treatment of the Iran-driven oil shock is the clearest sign of the problem, arguing that he never acknowledged that an oil supply shock functions as 'a tax on growth.'

The strategist warned that hiking into the shock 'risks turning a temporary price-level increase into recession,' and predicted another rate hike is likely coming in October.