Kevin Warsh's first major speech as Federal Reserve chairman at Jackson Hole on Friday has become an unexpected trial of his slimmed-down communications style. The challenge facing Warsh is to counter criticism that he hasn't been forthright with his views on the economy, without capitulating on his determination not to spoon feed investors with clues on future policy moves. Pressure from Wall Street is intense after a shaky press conference last month triggered a bond market rebuke, with economists and analysts relentless in calling out Warsh for going too far in limiting Fed communications. Warsh's task was made trickier last week when Treasury Secretary Scott Bessent announced surprise buybacks of US debt in an effort to lower long-term yields. Defenders say the market reaction to his July press conference was overdone, noting inflation expectations remain anchored at a level consistent with the central bank's 2% target, while critics argue he must explain the Fed's non-policy action in July without slipping into forward guidance.
Warsh's communication style and Treasury buybacks create uncertainty, potentially raising yields.
