Federal Reserve Chair Kevin Warsh’s tightrope walk atop the central bank will get even dicier on Wednesday afternoon.
Investors are split on whether policymakers will decide to raise interest rates as inflation rises again following a brief intermission in the Iran war — or, given a benign inflation report last month, if they’ll continue to hold them steady.
If policymakers hike, Warsh will have to provide a window into their outlook in order to stop markets from reacting in anticipation of a series of raises that may never come.
If policymakers don’t hike, Warsh will need to temper investors’ fears that the Fed might never act on his hawkish posturing.
Either way, he’ll be forced to defend the task forces he’s tapped to overhaul the central bank now that he’s finalized their membership — and internal concerns have been made public.