New Fed Chair Warsh Q&A:
I see no reason to revisit 2% inflation goal until we have delivered The ‘no reason’ comment is hawkish.
My expectation is the task forces will begin work ‘in the next couple weeks’
Most or all will conclude by year end
Inflation is primarily determined by monetary policy
We have the capability to deliver on 2% and that’s exactly what we’re going to do
Can’t provide forward guidance, we will meet again in six weeks
Policy on housing appears somewhat restrictive, but I would have a hard time saying that about financial markets
Policymakers don’t feel bound by dots
Pretty open minded about communications
Colleagues have been very open about changes
Importantly, he repeatedly talked about delivering on the Fed’s mandate and immediately highlighting the part on price stability and not mentioning the employment side of the mandate.
“Fed statement says that inflation is primarily determined by monetary policy. You bet it is. I’ve said for years inflation is a choice. You bet it is.”
“We’ve missed on inflation for five years and we’re going to fix that”
Criticizes survey data statistics
Markets react best when they react to incoming info, not ‘how will the Fed react’
The Fed’s job is to ensure no second-round price effects
We have work to do on the price stability front
I don’t believe we have a cruel choice to make on full employment and stable prices
This is all very hawkish in my view. It might take awhile for markets to realize that this is still the 2010 Warsh who was a total hawk.
Warsh finished by saying that the FOMC wants to ‘put some points on the board’ in regards to its inflation mandate.
US 2-year yields are up 13 bps.