Interest rates and the problem with ‘forward guidance’ from the US Federal Reserve
Kevin Warsh must stay clear on the objectives of policy and sensible on how the central bank conducts itself.
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Kevin Warsh, chairman of the US Federal Reserve, walks the grounds during the Kansas City Federal Reserve’s Jackson Hole Economic Policy Symposium on Aug 28.
PHOTO: BLOOMBERG
Martin Wolf
Is it possible that Kevin Warsh will prove to be the central banker the US and the world need? After his speech at the Jackson Hole Symposium, I am less pessimistic about the prospect than before. Difficult choices – difficult intellectually and politically – lie ahead. But his speech In Our Time was both clear and sensible – clear on the objectives of policy and sensible on how the Fed should conduct itself.
This is cheering. It could also prove of great future importance. Warsh has been a confusing figure. In the past, he has presented himself as an inflation hawk, notably with his wildly premature concern over the dangers, notably to inflation, of the monetary policies adopted after the global financial crisis. Indeed, he already expressed this concern in March 2010.
