Recorded at 8.45 a.m. in London on Wednesday 22nd July
In this “Fireside Chat,” Gavyn Davies, Founder and Executive Chairman and Andy Bevan, Partner and Economic Advisor, discuss the following:
- Along with his well-known views on the need for a smaller balance sheet and less forward guidance on interest rates, Fed Chair Warsh favours more attention to money supply and credit aggregates
- The modern monetary policy framework was built around New Keynesian models, with money supply having little direct relevance for interest rate setting
- The Fed Chair believes high fiscal deficits and the size of the balance sheet have blurred the distinction between fiscal and monetary policy
- Warsh also believes that the spike in money supply growth in 2020 played a role in the subsequent persistence of inflation over several years
- The Fed uses a financial conditions framework, but this is based on asset prices alone and does not give a complete picture of monetary policy transmission
- Recent research suggests monetary aggregates can still provide useful long-term warnings about inflation risk but is not currently signalling the need for an interest rate hike
This content is provided for informational purposes and is directed to clients and eligible counterparties as defined in Directive 2011/61/EU (AIFMD) and Directive 2014/65/EU (MiFID II) Annex II Section I or Section II or an investor with an equivalent status as defined by your local jurisdiction. Fulcrum Asset Management LLP (“Fulcrum”) does not produce independent Investment Research and any content disseminated is not prepared in accordance with legal requirements designed to promote the independence of investment research and as such should be deemed as marketing communications. This document is also considered to be a minor non-monetary (‘MNMB’) benefit under Directive 2014/65/EU on Markets in Financial Instruments Directive (‘MiFID II’) which transposed into UK domestic law under the Financial Services and Markets Act 2000 (as amended). Fulcrum defines MNMBs as documentation relating to a financial instrument or an investment service which is generic in nature and may be simultaneously made available to any investment firm wishing to receive it or to the general public. The following information may have been disseminated in conferences, seminars and other training events on the benefits and features of a specific financial instrument or an investment service provided by Fulcrum.
Any views and opinions expressed are for informational and/or similarly educational purposes only and are a reflection of the author’s best judgment, based upon information available at the time obtained from sources believed to be reliable and providing information in good faith, but no responsibility is accepted for any errors or omissions. Charts and graphs provided herein are for illustrative purposes only. The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. Some of the statements may be forward-looking statements or statements of future expectations based on the currently available information. Accordingly, such statements are subject to risks and uncertainties. For example, factors such as the development of macroeconomic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. In no case whatsoever will Fulcrum be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages. Reproduction of this material in whole or in part is strictly prohibited without prior written permission of Fulcrum Copyright © Fulcrum Asset Management LLP 2026. All rights reserved.
FC1891 220726
