Fed Chair Warsh Pushes 2% Inflation Overhaul as Markets Question His Silence
Updated
Updated · The New York Times · Aug 7
Fed Chair Warsh Pushes 2% Inflation Overhaul as Markets Question His Silence
3 articles · Updated · The New York Times · Aug 7
Summary
Two months into the job, Kevin Warsh is recasting Fed policy around less guidance, revamped data systems and new models after five years of inflation above the 2% target.
His “play the ball, not the referee” approach has drawn skepticism because bond markets price medium-term rates largely from expected future Fed moves, making silence itself a policy signal.
That leaves Treasury investors unsure whether the Fed would tighten aggressively enough if inflation flares again, even as Warsh’s critique of outdated data and models carries more weight.
Warsh has also weighed cutting policy meetings to six from eight annually, a shift that could further reduce forward guidance and raise volatility around inflation decisions.
The broader test of his chairmanship may lie beyond Fed mechanics: persistent federal deficits could undermine any effort to restore confidence in price stability.