Former Fed Vice Chair Alan Blinder Says Kevin Warsh Delivered Forward Guidance in Speech
In a speech at Jackson Hole on August 28, Federal Reserve Chairman Kevin Warsh outlined concerns about high inflation and the strength of the U.S. economy without explicitly stating future policy moves. Former Fed vice chairman Alan Blinder interpreted this as forward guidance, suggesting that Warsh is likely considering another rate hike in September. Market odds for a potential increase rose to nearly 60% following the speech. Warsh emphasized stable labor markets and stronger economic growth but noted inflation remains too high despite recent improvements. He reaffirmed the Fed's focus on the Personal Consumption Expenditures (PCE) index as its primary measure of inflation, while also highlighting other data points like corporate earnings and capital spending. Former Kansas City Federal Reserve President Esther George praised Warsh’s speech for providing a detailed economic assessment without overpromising. Blinder suggested that Warsh may prefer less transparency than his predecessor Jay Powell, but the Fed will likely continue to monitor incoming inflation data before its September meeting.
Topics: Federal Reserve Forward Guidance Inflation Interest Rates