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New Federal Reserve Chair Kevin Warsh rolled out many new initiatives at the central bank on Wednesday, from balance sheet management to public communications — and a potential rebrand for more hawkish policy.
“I am pleased to report that members of the FOMC are unambiguous and unanimous: This committee will deliver price stability,” Warsh declared after policymakers voted unanimously to hold interest rates steady.
It was a reframing of a decision that shrugged off President Donald Trump’s ongoing campaign for lower rates in the face of recently accelerating inflation. Warsh has to walk a tightrope at the central bank, avoiding the type of strong-arming Trump tried with former Chair Jerome Powell while delivering his previewed overhaul of key elements of the Fed without isolating his new colleagues — including Powell.
Warsh seemed to hit the mark on Wednesday as he announced his first changes at the central bank. The shifts extend to the much-analyzed statement the Fed releases after meetings, which as of Wednesday did not include language indicating officials’ next move.
Warsh, who was sworn in last month, told reporters that his aim is “the pursuit of truth,” adding: “I think we’re going to come up with some new and interesting things.”
The new chair was also the only policymaker to not pencil in an interest-rate move for the rest of the year after he spoke out against the so-called dot plot during his Senate confirmation. He also declined again to commit to regular press conferences like his predecessor, instead reiterating that “when you have one, you want to make sure you have something important to say.”
Yet the specter of the Trump administration’s previous attempts to hem in the Fed will linger for Warsh. Illustrating the low chances of Trump getting his long-sought rate cut, nine out of 19 officials penciled in an interest-rate hike this year at the close of this week’s meeting.
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Warsh described a series of five Fed task forces that would tackle issues he called “central to the broad conduct of monetary policy,” most of which he referenced during his confirmation.
They’ll evaluate how the Fed teases its next moves, how it structures its bond portfolio, how it gathers data, how recent technologies like AI impact productivity, and how it evaluates the root causes of inflation — though not whether it should revisit its inflation target of 2 percent.
Warsh is still talking to some of “the very best minds” in and out of the Fed, he said, across “business and economics and the academy and technology and the rest” who might serve on the task forces.
Leaning on Fed staff, those recruits will begin work over the next couple of weeks to “ultimately propose next steps for policymaker consideration” — ideally between the fall and the end of the year, Warsh said.
“What we’ve given markets is a new chapter for the central bank; some fresh thinking,” Warsh said. “What we’ve given markets and households and businesses, I think, is a commitment to ask ourselves hard questions, such that we can deliver on the promises that we’ve made.”
He added a forecast of more shakeups to come: “This is a lot of change for financial markets to digest.”
Notable
- Trump told reporters Wednesday that the Fed’s decision Wednesday was “all right,” adding that it was “hard to believe” policymakers might hike rates.