Kevin Warsh’s Fed Communication Strategy Has Trade-Offs

“Federal Reserve chairman Kevin Warsh testified before Congress over two days last week, totaling more than five hours. Yet it was comments from several of his colleagues that gave the clearest picture of what the central bank is likely to do at next week’s policy meeting,” Axios reports.

“It is a central paradox of Warsh’s communications strategy. He is determined to get out of the business of giving markets and the public much guidance on future policy, which means the markets fill in the gaps based on comments from other officials.”

“That isn’t necessarily a bad thing — it preserves flexibility on interest rate policy that was diminished when former Fed chiefs all but preannounced upcoming rate moves.”