Wall Street was never going to enjoy Kevin Warsh’s new, minimum viable communications approach at the Federal Reserve. Even if some analysts could understand why Warsh’s strategy might benefit the central bank, it remains uncomfortable for them to operate with reduced guidance in a time of economic uncertainty. But Jamie Dimon, CEO of JPMorgan Chase, is backing the new chairman’s methods despite criticism from some of his peers. Dimon, the leader of America’s largest bank, said he “thinks the world’ of Warsh and added his approach makes “tremendous sense.”Dimon’s backing comes amid a turbulent adjustment to Wall Street’s relationship with the rate-setting central bank. Warsh, new to the role of chairman but a veteran of the Fed, has pulled back from the practice of forward guidance (indicating the path of rates and, as such, giving investors confidence that the Fed is taking its mandate of 2% inflation and maximum employment seriously). This has been seen by various critics as diminishing transparency and a dismantling of policy progress.
Treasury markets bristled during Warsh’s post–Federal Open Market Committee (FOMC) press conference last week, in part in response to Warsh’s suggestions that inflation frameworks might change, and because markets were being asked to “play the ball, not the referee.”
