US Fed Chair Warsh Takes the Mic

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Sarah Holder** (0:08)
Warsh said he described his Jackson Hole speech as, quote, a blank piece of paper. Does that mean he's just gonna wing it, or just that he doesn't yet know?

**Joe Weisenthal** (0:16)
I was sure he meant he doesn't yet know. In true keeping to his own values, he won't even give forward guidance about what he is going to talk about.

**Sarah Holder** (0:29)
I'm Sarah Holder, and this is the Big Take from Bloomberg News. Joe Weisenthal, the co-host of the Odlots podcast, joins me today on what to expect from Kevin Warsh's first major speech as the chairman of the US Federal Reserve, as he grapples with the pressures of politics and rising yields.
So, Joe, you're headed to Jackson Hole, Wyoming, this week for the annual Kansas City Fed Conference. This year, there's this one major thing to look out for, which is Kevin Warsh's first Jackson Hole speech as Fed chair, which he'll give tomorrow, Friday.

**Joe Weisenthal** (1:08)
There's no requirement for what it's worth that the Federal Reserve chair has to show up there, but typically the Fed chair shows up. Historically speaking, over the last 15 years or so, it has been a site where big speeches, big broader speeches, are delivered. This speech is going to represent where are our heads at as central bankers. What should we be thinking about?

**Sarah Holder** (1:28)
A pulse check on the economy from one of the most important economic figures in the country.

**Joe Weisenthal** (1:32)
And so Kevin Warsh, he hasn't really shown his cards in terms of how he thinks the interaction of monetary policy in the economy is right now. He's had two press conferences as Fed chair. He doesn't say much about that.

**Sarah Holder** (1:45)
By design, right?

**Joe Weisenthal** (1:46)
By design, that's his style. Then there is the fact that rates have been shooting up, inflation continues to be above target. So it's one thing to say, as he said, that we've got to get inflation down, but unless you do something about it, talk about it, it doesn't matter.
And then there is all the work that he's done in terms of just sort of rethinking how the Fed operates. So the question is, is he going to tell us something new about how he thinks the Fed should be operating, some sort of like new guiding principles, some new changes in direction, or is he going to give a speech that is kind of like, all right, now let me tell you what I think we should be doing right now over the next several meetings to close the gap between where inflation is versus where we want it to be? Whatever he says might be weird, because if he started talking very much about like, this is where I think the economy is, this is the prescription I think it needs, that would be a departure. But if he gave a speech kind of like his press conferences, which have just been like, I'll get back. Nothing burger. Yeah, he really hasn't said much. That would be a weird venue to deliver there. So it's a big wild card to me. I don't think anyone really knows.

**Sarah Holder** (2:55)
Yeah, Kevin Warsh has been pretty clear that he wants to approach the Fed chair job differently than his predecessors. He's not into forward guidance.

**Joe Weisenthal** (3:01)
That's right.

**Sarah Holder** (3:01)
He's in favor of the Fed communicating less and wants markets basically to do the talking. How has his strategy been working so far? And why has his approach been so unsettling to some?

**Joe Weisenthal** (3:12)
He makes some points that people should take seriously about how the Fed communicates. So I mentioned that at his press conferences, he doesn't really say much about his plans. But this is a very novel innovation by the Fed to have press conferences in the first place. Alan Greenspan wasn't doing press conferences, and there was much less Fed chatter generally. So one could certainly make the argument that some of these new approaches to communication, which really accelerated after the financial crisis, have outlived their usefulness.
And when he talks about his dislike of forward guidance, the dot plot is a tool to express forward guidance. All the members of the FOMC saying, basically, this is where we think the economy is going, and this would be the appropriate trajectory of policy in order to get us.

**Sarah Holder** (4:04)
And people salivate over those dot plots.

**Joe Weisenthal** (4:06)
Yeah, and it's all pretty new, though. Other central banks don't have dot plots. None of these things are set in stone. What I think unsettles people with Kevin Warsh is we don't have any real idea yet about how he perceives the relationship between the Fed's toolkit and how it can be used to accomplish the Fed's dual mandate.