Warsh expects to deliver a broad overview of task force work and Fed operations rather than detailed economic analysis or policy guidance.
“If I had to guess, I would say that he's going to give a very high-level, broad look at the work of the task forces and how he thinks the Fed should operate, as opposed to a nuts-and-bolts assessment of the economy and expectations for policy.”
The Fed chair communicates too little while the Treasury secretary communicates too much.
“You have a Fed chair who doesn't say enough and a US Treasury secretary who says too much,”
Markets have inflated expectations for the Jackson Hole speech beyond what the Federal Reserve intended.
“The market has now bid this up to be something that I think the Federal Reserve would rather it not be.”
A new Fed chair's Jackson Hole speech sets the interpretive framework that will be applied to economic data for the following year.
“New chairs use this stage to set the frame for their tenure, and whatever language he establishes Friday gets applied to every data print for the next year.”
Warsh suggests that reducing forward guidance may have contributed to prices responding more quickly to incoming data.
“Prices reacted in real time to incoming information, and the reduction in forward guidance may have been a factor,”