The Federal Reserve holds interest rates steady in the first meeting chaired by Kevin Warsh.
Warsh says markets should focus on data, not guidance
As we've been reporting, the Fed statement removed any guidance about future rate moves altogether.
Asked during the press conference if the lack of forward guidance would lead to more market volatility, Warsh said the financial markets perform best when they react to data.
"I think the financial markets work less efficiently when they ask a question, 'how will the Federal Reserve react to that incoming information?,'" he said.
"The more that markets are paying attention to what's happening in the real economy, deciding what's good data and what's less good data, the more financial markets can price what they believe is the most likely," he said.
Warsh confirms he did not submit a dot
Warsh did not appear to have submited an interest-rate-path projection as part of the central bank’s quarterly forecasts.
Asked about the projections, Warsh confirmed that he did not submit a dot for the so-called "dot plot."
"I did not submit a dot. For me, it's not helpful in the conduct of policy," he said.
"I suspect by year end, as I mentioned in my opening statements, there'll be a review about communications. Broadly, press conferences, dots, meetings and the like. Transcripts, minutes. This will be part of that," he said.
Asked about the future of Fed press conferences, Warsh said they can be a "very useful way" to communicate with households and businesses.
"When you have one, you want to make sure you have something important to say. Today, I think we had something important to say about our commitment to deliver on price stability, our commitment to rethink practices," he said.
He added that he expects "more changes to come. And, some of those might well be worthy of a press conference."
Warsh announces task forces
Warsh announced the launch of task forces in five areas, including on the Fed's communications, the Fed's balance sheet, the use and reliance on existing data sources, the productivity and jobs in an era of transformation and the Fed's inflation frameworks.
"For each of these independent task forces, I'm enlisting some of the very best minds, both inside and outside the economics profession," he said.
He said the task forces would be supported by Fed staff.
Asked on the likely timing of the task forces, he said: "My expectation is the task forces will begin work in the next couple of weeks, and we'll start to get some more information from them, some more framing of how they see things, starting in the fall. And hopefully most, if not all of them, concluding by year end."
'A bit shorter, a bit simpler'
As we mentioned earlier, the Fed's policy statement was shorter than under Powell.
Warsh has just touched on this.
"It's a bit shorter, a bit simpler, and it dispenses with some older language. That statement just gives you the facts as best we can judge it," he said.
"Absent also is so-called forward guidance, which we agreed was not well suited to the current policy conjuncture."
Warsh says the Fed will work on implementing changes
He said: "This week's FOMC meeting exemplified the very best of the Fed's traditions: rigorous debate, open mindedness, commitment to mission, responsibility, and accountability for performance."
He also said the Fed will work on implementing changes that "might improve the conduct of monetary policy."
"A change in leadership is a natural and timely opportunity to reaffirm its mission to review current practices and to consider whether those practices best meet our objectives."
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