In the week since the most recent US Fed monetary policy decision, pressure has mounted on new Chair Kevin Warsh’s ‘say nothing’ strategy.
Most notably, Chair Warsh eschewed providing forecasts for the Fed’s June macro projections, and the Fed has dramatically reduced the length of its monetary policy statements since his arrival.
Aside from a firm commitment at his press conferences to achieve price stability, the new Chair’s inaction has brought criticism on the Fed, but Warsh is set to stick with the new approach despite the building pressure in bond markets.
That strategy is likely to entail a renewed focus on interest rates as the primary monetary policy tool, with a reduction in open market bond purchases and a commensurate shrinking of the Fed’s balance sheet.
