Warsh says inflation is above 2% target and Fed's predominant focus should be on prices.
“Inflation is running above our 2% target. So the Fed's predominant focus right now should be on prices.”
Warsh sets standard that underlying inflation must move clearly and at sufficient speed to objective.
“So here is my standard. We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed.”
Warsh sets standard requiring confidence that underlying inflation is moving to objective at sufficient speed.
“We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. Otherwise, we have work to do.”
Warsh sets standard requiring clear evidence of inflation moving to target at sufficient speed.
“We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. Otherwise, we have work to do.”
Warsh notes profit margins are quite elevated relative to history with low equity volatility.
“he says profit margins are quite elevated related to history and overall equity market, the volatility is low.”
Warsh says 2021 forward guidance may have delayed the Fed's response to high inflation.
“I am not alone in noticing that forward guidance in 2021, to cite just one example, might well have slowed the policy response to high inflation.”
Warsh reports PCE inflation at 3.7% over twelve months, above 4% over six months.
“The Fed's preferred measure of inflation, the one I talked about earlier, the twelve month change in the PC price index stands at 3.7%, with the six month change a little above four.”
Warsh sets the standard that the Fed must be confident inflation is moving to target at sufficient speed.
“So here is my standard. We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. Otherwise, we have work to do.”
Warsh argues hardworking Americans, not financial market participants, bear the worst costs of Fed policy errors.
“If the Fed gets inflation wrong and judges the economy wrong, who gets the worst of it? Not the financial high flyers.”
Warsh says Fed forward guidance in 2021 likely slowed the policy response to high inflation.
“I am not alone in noticing that forward guidance in 2021, to cite just one example, might well have slowed the policy response to high inflation.”
Warsh cites Fed's preferred inflation measure at 3.7% over twelve months, above four percent over six months.
“The Fed's preferred measure of inflation, the one I talked about earlier, the twelve month change in the PC price index stands at 3.7%, with the six month change a little above four.”
Warsh states all inflation measures show inflation running above the Fed's 2% target.
“None of these measures are perfect, but they all tell a similar story. Inflation is running above our 2% target.”
Warsh says Fed must be confident underlying inflation is moving to target at sufficient speed or continue policy work.
“We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. Otherwise, we have work to do.”
Warsh sets timeline expectations, saying Fed cannot deliver in days or weeks but will fulfill congressional mandate.
“We've got no magic wand. This isn't something that we're gonna be able to carry out in days or weeks, but we're gonna deliver on the responsibility that congress gave us.”
Warsh announces the updated consensus statement emphasizes promoting maximum employment and stable prices across broad economic conditions for all Americans.
“The updated statement, also commonly known as the consensus statement, emphasizes that the FOMC's monetary policy strategy is designed to promote the congressionally-assigned goals of maximum employment and stable prices across a broad range of economic conditions for the benefit and well-being of all Americans.”