economy
'Regime change but in a velvet glove': How Kevin Warsh has set out to remake the Fed
The first big announced changes point toward a quiet revolution, with task forces set up to rethink virtually everything done at the Fed.
TL;DR
- Fed Chairman Kevin Warsh has launched five task forces to rethink monetary policy and its approach.
- The task forces will examine communications, economic data, inflation views, AI's impact, and the Fed's balance sheet.
- Warsh aims for a 'clear-eyed' Fed that is 'fit for purpose' and 'focused on the future'.
- The changes are described as a 'regime change' delivered with a 'velvet glove', contrasting with Warsh's previous 'harsh rhetoric'.
- Key areas of review include communication strategies, data usage, inflation analysis, and the balance sheet's size and composition.
- Changes to communication include a return to an older format for post-meeting statements and a potential elimination of the 'dot plot' forecasts and adjustments to press conferences.
- Warsh has previously objected to the Fed's large position in bond markets and the assessment of inflation, particularly the 'transitory' call.