Fed chair Warsh faces calls for clarity at Jackson Hole

Federal Reserve Chair Kevin Warsh faces pressure to give investors clearer signals when he opens the Jackson Hole central banking conference on Friday, after analysts said his reduced communication style has unsettled markets.

Warsh, appointed by US President Donald Trump and in office since May, is scheduled to speak at 8:00 am local time in Jackson Hole, Wyoming. The annual conference is closely watched by central bankers and investors worldwide.

Since taking office, Warsh has cut back Fed communications, ended forward guidance on the likely direction of interest rates and declined to give detailed public views on the economic outlook. Gregory Daco, chief economist at EY-Parthenon, said markets wanted “a greater sense of transparency and credibility” from the Fed chair.

The Fed's preferred inflation gauge stood at 3.7 percent on Wednesday, down from a three-year high in May but still above the central bank's long-term two-percent target. Warsh has said the Fed remains committed to bringing inflation back to target, while also hinting at changes to how it measures prices.

Bernard Yaros, lead US economist at Oxford Economics, said Warsh was unlikely to offer the level of detail investors want, saying he appeared to be sticking to a “less is more” communications strategy.

Warsh has set up task forces to examine issues including the macroeconomic effects of artificial intelligence, the data the Fed uses, balance sheet policy, the inflation framework and Fed communications.

Analysts also pointed to political pressure on the central bank. Trump has repeatedly demanded lower interest rates and has attacked the Fed's independence. Warsh has said he would defend the Fed's independence to set rates, but he has stayed silent on several specific disputes involving Fed officials and on the administration's planned bond-market intervention.

Yaros said that if Warsh remains silent, markets may treat him as only one vote on the Fed's rate-setting committee and give more weight to other policymakers' comments.