New York —
President Donald Trump’s handpicked central bank chief is conducting an experiment on the grandest of stages. Trump’s point man on the economy is getting in the way.
Federal Reserve Chair Kevin Warsh has stopped spoon feeding Wall Street clues on what the US central bank will do next.
His hope is that if the Fed ditches “forward guidance,” the bond market will stop trying to guess how the Fed is interpreting data releases and other factors and instead simply respond to the economic data itself. In theory, this untainted market response can then guide Fed officials debating whether to raise or lower rates.
That hands-off approach from Warsh was already facing perhaps insurmountable real-world obstacles because it’s almost impossible to get the market to stop obsessing over the next Fed move. And then Treasury Secretary Scott Bessent introduced a new wrinkle: a very hand-on approach in the Treasury market. His intervention in the bond market last week was widely viewed as an effort to put a lid on surging yields.
