Analysis: Warsh’s style raises questions over the Fed’s post-2008 communication tools

An analysis characterizes Kevin Warsh as a possible sharp break from the more communicative styles associated with Ben Bernanke, Janet Yellen and Jerome Powell. It notes that regular press conferences and FOMC dot plots emerged during and after Bernanke’s tenure rather than representing centuries-old central-bank practice.

The analysis links those tools to the post-financial-crisis period, when the Federal Reserve had cut rates to zero and needed other ways to signal continued support. It says they may be less necessary under different macroeconomic conditions, while acknowledging uncertainty over whether Warsh would actually eliminate press conferences or dot plots.

It also challenges Warsh’s suggestion that market participants should focus on the economic “ball” rather than the Fed “referee.” The analysis argues that U.S. government bonds effectively price expectations for how the 12 voting FOMC members will act at upcoming meetings, as they pursue maximum employment and stable prices, formalized as a 2% inflation target.