Fed Chair Warsh to Speak at Jackson Hole Amid Persistent Inflation Concerns
Federal Reserve Chair Kevin Warsh will deliver his first Jackson Hole keynote as policymakers grapple with stubborn inflation and uncertainty over future rate guidance.
Federal Reserve Chair Kevin Warsh is scheduled to give his first keynote speech as Fed head at the Jackson Hole Economic Policy Symposium on Friday, a meeting that brings together central bankers from the United States and abroad to discuss monetary policy. Warsh, confirmed in May, has already overseen two policy meetings and has moved away from forward guidance, removing forward-looking language from post-meeting statements and commissioning a review of Fed communications.
Analysts say the speech will be closely watched for any clues about the Fed’s approach to inflation and interest-rate decisions. Gregory Daco, chief economist at EY-Parthenon, noted the high level of uncertainty about what Warsh might say and expressed a desire for clearer communication on economic data, inflation, employment and policy.
"I think there is tremendous appetite, at the same time, for him to clarify some of his views, come back down to earth when it comes to his communication around economic data, around inflation, around employment and around policy," Daco said.
Daco added that markets are seeking more guidance because recent bond-market moves, which have pushed yields near recent highs, reflect concerns about the Fed’s credibility and transparency. He highlighted that at the July Federal Open Market Committee meeting, policymakers left the federal-funds rate unchanged at 3.5%-3.75% after a 9-3 vote, with three members dissenting in favor of a 25-basis-point hike amid elevated inflation.
Inflation remains above the Fed’s 2% target, with the personal consumption expenditures index at 3.7% year-over-year and core PCE at 3.3% in July. Market expectations, as measured by the CME FedWatch tool, show a 45% probability of a 25-basis-point rate increase by December, though Daco’s firm expects the Fed to hold rates steady for the remainder of the year. He cautioned that Warsh is unlikely to commit to any specific future action in his keynote, preferring to avoid “cornering” himself on a particular decision for the upcoming September meeting.