US Federal Reserve chair nominee Kevin Warsh’s policy vision – outlined during his Senate confirmation hearing – signals an extension of “America First” into monetary policy, Chinese analysts said.

“Warsh’s policy proposals … mark a shift from acting as a ‘global central bank’ supplying unlimited liquidity worldwide to a new approach focused on tightly controlling the overall monetary spigot, prioritising domestic productivity and emphasising monetary sovereignty,” analysts at China International Capital Corporation (CICC) said in a note on Wednesday.

They argued this marked a break from previous phases of globalisation. In a global economy increasingly shaped by “deglobalisation” and US President Donald Trump’s reshoring agenda, the central bank might move to “safeguard the US dollar’s credibility and prevent it from sliding into long-term debasement”, they said.

Their comments follow Warsh’s remarks to the Senate Banking Committee, which oversees the Fed, that he would work with the US Treasury to reduce the central bank’s balance sheet, reiterating his concerns about its sizeable holdings.

CICC analysts said “the direction of balance sheet reduction is becoming clearer”, adding that changing market expectations often preceded policy adjustments.

“On asset prices, a notable narrative shift is that expectations of abundant US dollar liquidity may be subject to revision,” they added, warning that assets reliant on liquidity-driven gains and benefiting from US dollar “excess issuance” could face headwinds.

But analysts at Citic Securities said implementing such an agenda would take time. “Even if balance sheet reduction is formally launched in the second half of the year, the Fed has ample reason to proceed gradually,” they wrote in a note on Wednesday.

A measured pace would help prevent flooding the market with excess securities, though additional measures might also be needed, they said.