Kevin Warsh has taken over the chairmanship of the Federal Reserve by storm. In his first meeting at the helm of the Federal Open Market Committee (FOMC), he removed forward guidance, slashed the length of the FOMC statement, institutionalized change by launching five task forces to produce recommendations promising sweeping reforms and – in a pointed snub to the Fed’s own communications architecture – declined to contribute his own projections for the target federal funds rate, leaving a gap in the dot plot where the chairman’s estimate would normally sit alongside those of the other 18 FOMC members.
Chairman Warsh has made clear his aim to be a strong leader, neither shackled by any attempts by his predecessor to shift policymaking power to the voting members of the FOMC nor susceptible to political pressures or past policy precedents to deter data-driven monetary policy decisions. His ability to follow through on that posture, of course, is to be seen over the fullness of the chairman’s four-year term. However, his swift implementation of bottom-to-top reviews of the Fed’s decision-making foundations suggests to me that Chairman Warsh might be one of the more consequential leaders of America’s central bank. With this institutional overhaul under way, the Fed appears headed toward a new policy-setting regime rooted more in a reaction to hard data and market outcomes than in econometric models and dogma.
To read more, Chairman Warsh Swiftly Puts His Stamp on the Fed, please visit: https://doubleline.com/markets-insights/chairman-warsh-swiftly-puts-his-stamp-on-the-fed/
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