Kevin Warsh, the Fed's new chair, has a reputation for being tough on inflation.
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Kevin Warsh has taken the podium — and he plans to make some major changes at the central bank.The Federal Open Market Committee opted to hold rates steady at its June meeting, the first with former Wall Street executive Warsh as chair. FOMC leaders voted unanimously for the hold, with half predicting at least one rate hike by year's end.But what stuck out from Warsh's first press conference wasn't monetary policy; it was how much he plans to change long-standing Fed traditions.Fewer forecasts, more task forcesWarsh chose to eliminate the Fed's forward guidance in June's statement. That statement was bare-bones compared to his predecessors', with limited detail on how and why the Fed made its decision, a style that had been customary under Jerome Powell's tenure.The committee still published a quarterly dot plot showing FOMC members' estimates for where interest rates would end up in the coming years — though Warsh said he abstained from submitting his own prediction for future rates.It's unclear what economic predictions the FOMC will make going forward. While critics worry that this approach will reduce the central bank's transparency, Warsh hopes markets will rely less on Fed moves. He notably didn't talk much about Fed independence, which has been a key topic at previous meetings."I think financial markets perform best when they react to incoming data," he said. "The more that markets are paying attention to what's happening in the real economy — what's good data, and what's less good data — the more financial markets can price what they believe is the most likely and what is the tail risk."
