Former Chief Economist of the Federal Reserve of New York: Walsh trapped in a “hawk”, Fed or forced to increase interest rates

On 16 July, Christopher Hodge, former Chief Economist of the Federal Reserve in New York and Chief Economist of the United States of America in Natixis, stated that the hard-line Eagles of the Federal Reserve Chairman Walsh might be setting a dangerous “trust trap” for himself. Hodge points out that Walsh's aversion to “forward-looking guidance” and “point-line map” is justified in the current climate of uncertainty, but also exposes a dangerous tendency. “Wosh was extremely tough at his first meeting, adding to `price stability' and exclamation marks in almost every statement.” Hodge analyses suggest that this excessive hawk posture may be self-defeating. If CPI data in the coming months are noised by short-term disturbances (e.g., tariffs or energy shocks), Walsh may be forced to increase interest rates because of the “man-made” that had been set earlier, even if that was not the best option. Interestingly, Hodge narrated that the only two “doves” in Walsh's career took place during his two interviews for the Federal Reserve Chairman. This return to hawks may be a return to their personal creed, but may also limit the policy flexibility of the Fed. Despite Walsh ' s sharp rhetoric, Natixis expects the Fed to maintain interest rates throughout 2026。