Federal Reserve shifts away from forward guidance under new chief Kevin Warsh
Warsh cut the Fed statement to 132 words and launched five task forces to review policy, communications and the balance sheet.
- Federal Reserve Chair Kevin Warsh held his first policy meeting on Wednesday, stripping the Fed's statement of forward guidance and announcing a comprehensive review of central bank operations.
- Warsh, who took over last month, implemented this 'regime change' to reduce market dependency on Fed signals, arguing for a return to leaner communication mirroring former Chair Alan Greenspan's approach.
- The Fed launched five task forces examining operations including the $6.7 trillion balance sheet and inflation framework, while slashing the post-meeting statement to 132 words from 341 in April.
- Markets reacted with volatility as the 10-year Treasury yield jumped to 4.49% on Wednesday, with analysts warning the shift away from forward guidance increases uncertainty about the Fed's policy reaction function.
- Whether Warsh's approach stands the test of time remains uncertain, though he aims to create a Federal Reserve that is 'clear-eyed about its mission, fit for purpose, and focused on the future.
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Fed Chair Kevin Warsh Just Subtly Threw President Donald Trump and Jerome Powell Under the Bus in His First FOMC Meeting
Key PointsDonald Trump's handpicked successor to Powell, Kevin Warsh, oversaw his first Federal Open Market Committee (FOMC) meeting on June 17.Warsh's FOMC press conference pointed the finger of blame for elevated inflation at his predecessor and the president.Additionally, Warsh plans to shelve forward-looking guidance amid a historically expensive stock market.10 stocks we like better than S&P 500 Index › It's been a history-making last five …
Warsh moves to bring about ‘regime change’ at Fed
Federal Reserve Chairman Kevin Warsh’s first big announced changes point toward a quiet revolution, with task forces set up to rethink virtually everything done to set policy and the approach used to get there. Following his first meeting at the helm Wednesday, Warsh outlined the plan — a sprawling, ambitious endeavor entailing five task forces...
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