Economist Paul Krugman Says Kevin Warsh "Sounded Utterly Conventional" at Jackson Hole, Despite Promising a Break From Fed Tradition. Does That Continuity Mean Rate Policy Won't Change Much Under Him?
Key PointsWarsh wants to change how the Fed communicates with markets.
Federal Reserve Chairman Kevin Warsh has been hinting at wanting to run the Fed differently, yet his first speech at the Jackson Hole conference as chairman led economist Paul Krugman to a very different assessment. Krugman remarked that Warsh's remarks at Jackson Hole sounded "utterly conventional," suggesting that the new Fed chairman provided limited insight into how monetary policy would differ under his leadership.
This is particularly noteworthy given Warsh's advocacy for substantial changes at the Fed, particularly in the realm of communication. During his speech, Warsh contended that the Fed's tradition of providing forward guidance has outlived its usefulness. He advocated for retaining greater flexibility and placing more emphasis on upcoming economic and market data. However, his stance on determining interest rates did not deviate significantly from tradition.
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