Monetary Policy, Unconventionally

Beth Hammack, president of the Cleveland Fed, posted on LinkedIn hours after the jobs report that "today's jobs report reaffirms that the labor market appears to be roughly in balance" and that she "believe[s] persistently high inflation is the bigger concern." If recent inflationary trends continue, "it may soon be appropriate to act," she concluded.

Federal Reserve governor Chris Waller on Friday cast serious doubt on the textbook look-through strategy to handle the Iran War-induced inflationary pressure — or what we fashionably called the "War? Sh~" strategy. And he is not the only central banker who has expressed reservations. 

Kevin Warsh on Wednesday put his stamp on his first FOMC meeting by keeping his promise to cut back forward guidance from the Federal Reserve's communications. The post meeting statement has fewer words; the press conference is shorter; Warsh didn't submit his projections for the dot plot; and he refused to answer any question that required him to sound like he was offering forward guidance. 

Powell announced his intention to stay at the Fed board after his term as chairman ends on May 15. The amount of time he will remain at his governor position, which will only expire in Jan 2028, is still to be determined, as Powell said it will depend on whether the legal attacks by the Donald Trump administration are "well and truly over with finality and transparency." 

Let's get this straight: Warsh hates forward guidance. But if we look at the three dissent statements from the Reserve Bank Presidents who voted against the FOMC decision, we can see that forward guidance is not a thing that Fed officials will easily concede. 

Federal Reserve Governor Powell, who vowed to be a "low-profile" Fed governor in support of Chairman Warsh, made sure everyone still heard him in his first speech after handing over the chairmanship.

Kevin Warsh will officially take charge of the Federal Reserve on Friday as he will be sworn in as the next Fed chair at...