Kevin Warsh just held his first press conference as Federal Reserve Chairman, and the message was clear: stop watching us, start watching the data.
The Fed held the federal funds rate steady at 3.25% following its June 16-17 meeting. What did turn heads was Warsh’s broader vision for how the central bank should communicate with markets, and more importantly, how it shouldn’t.
Five task forces, one big message
Warsh used his inaugural presser to announce the formation of five task forces, each targeting a different area the new chairman apparently thinks needs a hard look. The groups will review Fed communications strategies, balance sheet policies, data sourcing, the impact of artificial intelligence on productivity and jobs, and inflation frameworks.
The communications task force is particularly telling. Warsh has long been skeptical of the Fed’s tendency to telegraph its every move, arguing that markets work better when they respond to actual economic data rather than parsing every syllable from Fed officials.
