Economist Paul Krugman Says Kevin Warsh "Sounded Utterly Conventional" at Jackson Hole, Despite Promising a Break From Fed Tradition. Does That Continuity Mean Rate Policy Won't Change Much Under Him?
Warsh wants change, but inflation still dictates Fed policy.
Overview
Federal Reserve Chairman Kevin Warsh has spent months suggesting he wants to run the Fed differently. But after his first Jackson Hole speech as chairman, economist Paul Krugman came away with a very different conclusion.
Krugman said Warsh's Jackson Hole remarks sounded "utterly conventional," arguing that the new Fed chairman gave little indication that monetary policy would operate much differently under his leadership. That's particularly interesting because Warsh has been pushing for some fairly significant changes at the Fed, especially when it comes to communication.
Details
At Jackson Hole, he argued that the Fed's practice of providing forward guidance has "outstayed its welcome." Instead of constantly signaling where rates might go next, Warsh wants policymakers to retain more flexibility and put greater emphasis on incoming economic and market data. But his message on setting interest rates wasn't much different.
Source
Originally published at www.fool.com.