Warsh's quest for quiet Fed gets vocal pushback
TLT•Federal Reserve officials have made more than 40 public appearances since September's rate hike, pushing back against Chairman Kevin Warsh's preference for less central-bank communication. An October rate hike is now seen as a coin toss, and Warsh is expected to speak in Bangkok on Friday.
1. Officials keep speaking
More than 40 public appearances by nearly all of Warsh's colleagues have helped traders scale back rate-hike bets that had grown after September's rate increase and Warsh's silence on how much more the Fed may need to do. September consumer prices rose 3.7% from a year earlier, and an October rate hike is now seen as a coin toss.
2. Warsh favors less guidance
Warsh has argued that saying less about where policymakers think rates should go would push markets to take more cues from economic data. He has pared forward guidance in the Fed's post-meeting statement and convened a task force widely expected to recommend dropping the quarterly rate-path projections.
3. Colleagues defend communication
Other policymakers say public communication is important to monetary policy. New York Fed President John Williams and Fed Vice Chair Philip Jefferson helped reset rate-hike expectations, while Governor Christopher Waller said giving no signal could surprise markets and create volatility. Warsh is scheduled to speak in Bangkok on Friday ahead of the Fed's decision in less than two weeks.
