Warsh takes ownership of inflation risk
💧Plus: Another ripple in US-Canada relations {beacon} It’s Friday. Leaf your worries behind — fall is almost here (or so my allergies believe). In today's issue: Warsh takes on inflation U.S.-Canada trade war makes waves Six months later, Iran war grinds on Mail-in ballot rules hit the brakes Programming note: Hello! We are...
Federal Reserve Chairman Kevin Warsh addressed Wall Street at his Jackson Hole keynote speech, emphasizing the central bank's priority on price stability and inflation. Warsh cautioned against the practice of forward guidance, stating it risks creating ambiguity and inhibiting the Fed's ability to make the right decisions. Despite concerns about the Fed's decision-making frameworks, Warsh remained committed to the dual mandate of inflation at 2% and maximum employment.
He noted that while employment was robust, the 65 months of elevated inflation were primarily the Fed's responsibility. Warsh's speech appeared to have had a calming effect on markets, with gold prices dropping, the VIX volatility index declining, and longer-dated Treasuries lowering. Despite his message, there was optimism that Warsh had learned from previous pushback and corrected some of his earlier mistakes.
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