Man Group: If the market questions the new chair, the Fed may need to restart QE

According to a report by Jinse Finance, Man Group stated that if the bond market begins to question the independence of the next Federal Reserve Chair, the Fed may have to resort to quantitative easing (QE) to lower long-term borrowing costs.

Kristina Hooper, Chief Market Strategist at Man Group, the world’s largest publicly traded hedge fund group, pointed out that investors need to recall what happened in the UK in 2022: at that time, traders dumped UK government bonds due to a lack of confidence in then-Prime Minister Liz Truss’s economic policies.

In a post on LinkedIn, Hooper wrote that since then, the UK’s borrowing costs have remained higher than many other G7 economies, reminding people that “the credibility of public officials is vital.”

She said, “If someone perceived as lacking independence is appointed as Fed chair, and that person focuses on lowering long-term rates, I suspect they would have to resort to QE, as that is the best way to achieve that goal.”