Fed Chair Warsh says must think about a new conduct for monetary policy and we'll be charting a new course so the Fed can make better decisions

• Exciting, consequential time to be a central banker.

FOMC/Guidance:

• Reiterates not going to give forward guidance.
• Wants to have good debate with his colleagues on FOMC, and he values their views.
• Doesn't want to make any judgements now, the Fed is set to meet in four weeks.
• We'll be an independent central bank, and no changes in independence.
• If there are obstacles that prevent them from having healthy debate at meetings, should get rid of it, was referring to forward guidance.
• Would not be surprised if in 12 months in a better path to deliver the mandates of the central bank.
• Reiterates interest rates should be the dominant means by which the Fed sets monpol.
• Fed will remain independent after Supreme Court.
• We'll follow Supreme Court decision.
• His hope is that in 9-12 months from now they'll be using new tech to understand the economy.
• There will be dot plots at least for the short time.

AI:

• AI boom is showing itself first and very prominently in the US, trying to monitor these developments, and up to the Fed to decide if AI is inflationary.
• In terms of the inflationary impact in the near term, can observe it on the demand side.
• Whether that finds its way into a broader set of goods, Warsh doesn't have any news on that front.
• Monetary policy spills over between their economies.
• US likely to be a big winner from AI.
• Suggests only in the first or second innings of this revolution.

Dual Mandate:

• Fed wants to deliver price stability.
• Fed must deliver on both sides of its mandate.
• Labour markets are steady.
• Supply side solid, and in the price stability business.
• Looked around, and see that prices are too high.
• Expectations of inflation over the first four weeks have come down.
• If anyone thought we'd be happy with inflation above 2%, they'll be disappointed.

Economy:

• Volatility is down, yields are down.

Task Force:

• Next week will likely have news on the leaders on the task force that he's appointed.

FX:

• Declined to comment on the Yen, and says he won't be drawn into it.

Productivity/Growth:

• Over the last year, productivity in the US and structural productivity is in high 2% range.
• Potential growth looks like it has trended upwards.
• If last four quarters an indication, reason to be optimistic.

Balance Sheet:

• Asked about what comfortable level he sees the balance sheet at, but again says no forward guidance.
• No secret wanted balance sheet to be smaller, and has not changed his view in first four weeks at the Fed.
• If there is a change in balance sheet policy, decision will be well deliberated and communicated.
• Balance sheet borders on fiscal policy.