CITIC Securities: Wosh's downsizing plan requires long-term preparation and the progress is gradual.

CITIC Securities research report stated that on April 21, the US Senate held a hearing on the nomination of Jerome Powell as Chairman of the Federal Reserve. Powell's statement showed that he faces a difficult balance. On the one hand, he needs to "please" Trump to a certain extent, thus acknowledging Trump's authority on interest rates; on the other hand, he needs to gain the trust of the market and the internal Federal Reserve, so he emphasizes the mission of price stability and the independence of the Federal Reserve. Although Powell's performance in answering questions from Democratic lawmakers was not satisfactory, this has a relatively small impact on whether Powell can succeed Powell. Powell's ability to pass the vote in the Senate Banking Committee depends on whether he can obtain the support of Republican Senator Tillis. We believe that Trump will most likely withdraw the investigation into Powell and provide support to help Powell pass the Senate vote. In the Q&A session, Powell emphasized that he will not be Trump's "puppet", and the market tends to favor hawkish trading. Powell's ideas on reforming the Federal Reserve deserve market attention, especially as he proposed a new inflation framework for the Federal Reserve and criticized the current forward guidance method of the Federal Reserve. Powell stressed that the Federal Reserve should shrink its balance sheet, with interest rates as the main tool. However, we still believe that Powell's balance sheet reduction plan requires long-term preparation and the pace of progress will be gradual.