Clarida: This Will Be the Warsh Fed

• Kevin Warsh advocates for a smaller Fed balance sheet, less credit allocation into mortgages, and reduced reliance on forward guidance.
• Clarida suggests a Warsh-led Fed would likely move towards these policy adjustments over time, requiring committee consensus.
• An economic boom this year, coupled with persistent inflation, could challenge the Fed's current stance and bring Warsh's skepticism about forward guidance to the forefront.

Former Federal Reserve Vice Chairman Richard Clarida discusses the potential impact of Kevin Warsh as the next Fed Chair. Warsh's views emphasize a smaller balance sheet, less forward guidance, and a focus on inflation, which could lead to significant, albeit gradual, shifts in monetary policy. Clarida also highlights the potential for an economic boom this year, which could test current Fed policy.