Howard Marks Backs Fed Chair Warsh's Push for Less Forward Guidance

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Oaktree Capital co-chair Howard Marks is backing Federal Reserve Chair Kevin Warsh's push for a less talkative central bank, arguing that markets have become too dependent on policy guidance. Speaking Sunday on Bloomberg This Weekend, Marks said his personal preference is for a less activist central bank that normally lets the economy do its thing unless it risks running too hot or too cold. His position tracks Warsh's emerging philosophy, laid out at Jackson Hole in August, that routine forward guidance had overstayed its welcome and could leave policymakers and markets overly committed to an expected path for interest rates. The shift arrives at a sensitive moment: the Fed raised its benchmark rate by 25 basis points last week to 3.75%-4.00%, citing still-elevated inflation despite solid economic growth, and less guidance from here could leave Treasury yields and equity valuations more exposed to surprises in inflation, employment and economic growth. Marks also flagged a longer-term risk from artificial intelligence's impact on employment and government finances, warning that if people are put out of work they won't pay taxes, a concern already entering Fed discussions after Warsh disclosed in August that the central bank has established a productivity-and-jobs task force examining how AI could reshape the economy. The September meeting minutes arrive October 7, followed by the next FOMC decision on October 28.