{"id":133197,"date":"2026-05-24T05:00:04","date_gmt":"2026-05-24T09:00:04","guid":{"rendered":"https:\/\/cablemanpro.com\/wallstreetpr\/peter-navarro-powells-shadow-fed-majority-could-threaten-jobs-housing-and-growth-133197"},"modified":"2026-05-24T05:00:04","modified_gmt":"2026-05-24T09:00:04","slug":"peter-navarro-powells-shadow-fed-majority-could-threaten-jobs-housing-and-growth","status":"publish","type":"post","link":"https:\/\/cablemanpro.com\/wallstreetpr\/peter-navarro-powells-shadow-fed-majority-could-threaten-jobs-housing-and-growth-133197","title":{"rendered":"PETER NAVARRO: Powell\u2019s shadow Fed majority could threaten jobs, housing and growth"},"content":{"rendered":"
\n

Kevin Warsh has now been<\/a> sworn in as the new Federal Reserve Chair.\u00a0Outgoing Chair Jerome Powell has refused to leave the Fed Board of Governors, breaking with the modern custom that departing Fed chairs leave the Board rather than linger as rival power centers.\u00a0 \u00a0<\/p>\n

The clear danger: Powell will have enough Board support to act as Fed Shadow Chair and force a series of rate hikes down Warsh\u2019s throat.\u00a0<\/p>\n

Never mind that even a single rate hike would be the worst possible response to an oil-price shock. Never mind that two of Jay Powell\u2019s predecessors understood the difference between demand inflation and an oil shock.\u00a0<\/p>\n

When Iraq invaded Kuwait in 1990, Alan Greenspan understood that an oil shock can both raise headline inflation and damage growth. His FOMC repeatedly cut the federal-funds rate as the economy weakened.<\/p>\n

TRUMP’S FED CHAIR PICK KEVIN WARSH IGNITES FIGHT OVER INDEPENDENCE ON CAPITOL HILL<\/strong><\/a><\/p>\n

When oil, foodstuffs, fertilizers, and industrial metals all moved sharply higher in 2008 \u2014 driven by booming emerging-market demand, constrained supply, thin spare capacity, and speculative flows \u2014 Ben Bernanke\u2019s Fed likewise cut the federal-funds rate in April.\u00a0He then held steady in June and refused to launch a recessionary rate-hike campaign into prices the Fed could not drill, refine, mine, plant, or ship away. \u00a0<\/p>\n

That is the looming central error.\u00a0The Fed cannot produce one extra barrel of oil. It cannot reopen a shipping lane. It cannot refine gasoline. It cannot lower diesel costs by crushing mortgage demand in Ohio<\/a> or forcing a small manufacturer in Pennsylvania to roll over credit at punitive rates.\u00a0 \u00a0<\/p>\n

A Fed rate hike<\/a> now would rein in demand in response to a supply shock and hit precisely where the economy is already vulnerable. Housing would weaken further. Interest-sensitive manufacturing would suffer. Small-business credit would tighten. Financial conditions would tighten just as energy prices are eating real incomes.\u00a0 The dollar could strengthen, pressuring exporters.<\/p>\n

Memo to the Fed: An oil shock already acts like a tax increase. It takes money out of household budgets, raises transportation costs, compresses margins and slows real activity. If the Fed layers another rate hike on top of that, it does not solve the oil problem. It simply adds a credit shock to an energy shock.\u00a0<\/p>\n

Why do that when bond market vigilantes are already doing the contractionary policy work.\u00a0 A 30-year Treasury yield north of 5% and a ten-year north of 4.5% is not loose money. Mortgage rates<\/a>, corporate borrowing costs and duration-sensitive assets are already feeling the heat. In that weather, the central bank does not need to prove its toughness or independence by firing another round into the hull of the ship. \u00a0<\/p>\n

Nor are the April inflation reports an argument for panic. Core PPI came in a bit hot at 4.4% but core CPI was 2.8%. Neither number justifies treating an energy-led commodity shock as a demand-side emergency.<\/p>\n

The right question is whether the oil spike will spill into elements of the core and create second-round wage-price dynamics. We have\u00a0 a long way to go before we will know, and the Fed should not be in the business of playing worst case scenario games.\u00a0<\/p>\n

Instead, the Fed\u2019s job is as it always should be, to keep inflation expectations anchored<\/a> while preserving maximum employment. \u00a0As long bond yields rise, risk shifts increasingly to the recession side \u2014 as Greenspan and Bernanke long ago understood.\u00a0<\/p>\n

That\u2019s where the specter of Powell as Shadow Chair rears its ugly head: Three Biden-appointed governors \u2014 Philip Jefferson, Michael Barr, and Lisa Cook \u2014 remain in place.\u00a0 Powell and this Biden trio can now already form a four-vote majority on the seven-member Board. Bad enough.\u00a0<\/p>\n

If Trump appointee Christopher Waller<\/a> proves to be the pivotal defector, as he is signaling, this would turn Powell\u2019s Shadow Chair majority into a rout.\u00a0Warsh would have the title. Powell would control the reaction function.<\/p>\n

And the regional Fed presidents in Cleveland, Minneapolis, and Dallas \u2014 Beth Hammack, Neel Kashkari, and Lorie Logan \u2014 are already forming the chorus line for a possible hawkish pivot.\u00a0<\/p>\n

It is by this Shadow Chair math that Kevin Warsh \u2014 and the<\/a> American economy \u2014 may get boxed in. If Powell, his Biden-era allies, and the regional hawks force a rate-hike campaign into an oil shock, they will not be defending the Fed\u2019s credibility or proving its independence. They will be adding a credit shock to an energy shock \u2014 and proving only recklessness. The bill will come due not in the Eccles Building, but in factories, homes, small businesses, and export markets across America.\u00a0<\/p>\n

CLICK HERE TO READ MORE FROM PETER NAVARRO<\/strong><\/a><\/p>\n<\/div>\n

Source – https:\/\/www.foxnews.com\/opinion\/peter-navarro-powells-shadow-fed-majority-could-threaten-jobs-housing-growth <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Kevin Warsh has now been sworn in as the new Federal Reserve Chair.\u00a0Outgoing Chair Jerome Powell has refused to leave the Fed Board of Governors, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"twitter_2902945987_2902945987":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[16563],"tags":[],"stock_ticker":[],"class_list":["post-133197","post","type-post","status-publish","format-standard","hentry","category-market-news","entry"],"acf":[],"yoast_head":"\nPETER NAVARRO: Powell\u2019s shadow Fed majority could threaten jobs, housing and growth - Wall Street PR<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cablemanpro.com\/wallstreetpr\/peter-navarro-powells-shadow-fed-majority-could-threaten-jobs-housing-and-growth-133197\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"PETER NAVARRO: Powell\u2019s shadow Fed majority could threaten jobs, housing and growth - 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