Federal Reserve Chair Kevin Warsh delivered a much-anticipated policy speech and said almost nothing, which economics columnist Catherine Rampell says was the point.
During a Friday morning speech in Jackson Hole, Wyoming, Warsh warned that inflation remained “still worrisome” and landed a single joke aimed at monetary-policy obsessives. The audience could call his remarks “an outline” or “a framework,” he said, “but don’t call it forward guidance.”
Watching Warsh is “like reading a scroll in a different language that you’re not familiar with,” journalist Sam Stein said in a Friday episode of Receipts Live. Stein argued that a Fed chair’s job is “to never make news.”
Despite Stein’s perspective, Warsh’s quip “made it into every write-up of the speech,” Rampell said. That was the whole idea for Warsh, who she said turned focus away from a bigger problem.
“I guess he did his job,” Rampell said. “He distracted people from the actual potential credibility crisis that our financial policymakers are dealing with.”
At Warsh’s last press conference, he “made quite a bit of news unintentionally,” Rampell said. Warsh floated a change to “the yardstick [the Federal Reserve] uses for measuring inflation,” Rampell said, describing the remark as an offhand comment that “freaked out markets” that worried it signaled “a backdoor way to not be as tough on inflation.”
At his Friday speech, Warsh “kind of said nothing,” but the silence buried a question that actually mattered, Rampell said. She argued that Warsh was dodging a question about how the Fed views Treasury Secretary Scott Bessent’s bond buybacks, which he did to tame a turbulent bond market. However, the Treasury was “homing in on the Fed’s turf” with the move, Rampell said.
“The Fed is supposed to be the one that’s setting interest rates, mostly the short-term interest rates,” Rampell said. “But they also do things to affect long-term interest rates, like buying and selling long-term bonds. And now Bessent is getting in on that.”
The result is a basic and unanswered question of “who’s in charge,” and Warsh didn’t even touch the matter, which left “a lot of unresolved questions,” Rampell complained
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A recording from The Bulwark’s live video
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