Fed Chair nominee Warsh does not believe in forward guidance and says at this moment, supply side of the economy is changing dramatically; asked if he will be Trump's sock puppet, says absolutely not, he will be independent actor as Fed Chair
- Adds both rates and the balance sheet are important tools, as the balance sheet and rate policy should be working together.
- Credbility is the most important thing to him.
- When asked if he has agreed to lower rates, says Trump never asked him to predetermine rate decisions. Walsh says he would not agree.
- Tariffs is not why inflation is running high, says data being used to judge inflation is imperfect; need to see what the real inflation rate is.
- Inflation damage from the last several years has improved somewhat.
- One of the first projects of the Fed would be to review Fed data on inflation
Context
Warsh's remarks suggest a potential shift towards a more independent and data-driven Fed policy, diverging from the recent norm of forward guidance. His focus on credibility and the interplay between rate and balance sheet policy indicates a more nuanced approach to inflation and economic indicators, which could lead to changes in market expectations for future monetary policy. This stance may influence USD dynamics, especially against the backdrop of ongoing concerns about inflation and economic recovery.
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