Kevin Warsh plans clearer Fed messaging and balance sheet shrinkage
Business
Kevin Warsh just stepped in as the new chair of the Federal Reserve.
In his first Federal Open Market Committee meeting this week, he led a big policy meeting and made it clear he wants to shake up how the Fed talks to everyone.
Warsh plans to cut down on confusing messages, shrink the Fed's balance sheet, and stay out of government spending debates.
Fed dot plots underestimated 2021-22 inflation
Since 2012, the Fed has used lots of forecasts and charts (like those "dot plots") to guide markets, but these tools have often missed the mark.
For example, they seriously underestimated inflation in 2021-22.
Warsh thinks simpler, more direct updates will help rebuild trust in the Fed and keep its decisions independent from politics.