Kevin Walsh's first major speech since becoming Chairman of the Federal Reserve unexpectedly became a test of his streamlined communication style. The challenge facing Walsh is not only to respond to criticism from the outside world for not fully clarifying his economic views, but also not to give up his own claims, that is, to stop hinting at future policy trends to investors through too many clues. The Federal Reserve will hold its annual meeting in Jackson Hole, Wyoming, and Walsh will speak on Friday. This will be his chance to strike a balance between the two. The pressure from Wall Street was intense. An unstable press conference last month triggered strong reactions from the bond market. Since then, economists and analysts have continued to criticize him, believing that he went too far in limiting communication with the Federal Reserve. Last week, US Treasury Secretary Scott Bessent unexpectedly announced an increase in US bond repurchases to reduce long-term yields, making the situation facing Walsh even more complicated. Anwiti Bahuguna, Co-Chief Investment Officer of Northern Trust Asset Management, said: “Obviously, Walsh tends to say less rather than more. But the market requires a certain level of transparency and communication, such as why you are taking your current position and what you are seeing now, which is a reasonable question.” That doesn't mean the new chairman is likely to apologize for his actions. Walsh's supporters believe that the market overreacted to his July press conference. If the market's confidence in the Federal Reserve falls, inflation expectations should rise, but in reality, inflation expectations have risen only moderately, and are currently stable at a level consistent with the Fed's 2% target. They also believe that the rise in bond yields is being driven by multiple factors such as a surge in government and corporate borrowing. Randall Kroszner, a professor of economics at the University of Chicago and a Federal Reserve governor from 2006 to 2009, said that Walsh is only just beginning to push forward a communication mechanism reform with the goal of reducing clear guidance on future policy directions. “Sometimes markets make mistakes,” Kroszner said. When I worked at the Federal Reserve, the market made a lot of mistakes. There's always a run-in period when adopting a new approach.”
Zhitongcaijing · 3d ago
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Kevin Walsh's first major speech since becoming Chairman of the Federal Reserve unexpectedly became a test of his streamlined communication style. The challenge facing Walsh is not only to respond to criticism from the outside world for not fully clarifying his economic views, but also not to give up his own claims, that is, to stop hinting at future policy trends to investors through too many clues. The Federal Reserve will hold its annual meeting in Jackson Hole, Wyoming, and Walsh will speak on Friday. This will be his chance to strike a balance between the two. The pressure from Wall Street was intense. An unstable press conference last month triggered strong reactions from the bond market. Since then, economists and analysts have continued to criticize him, believing that he went too far in limiting communication with the Federal Reserve. Last week, US Treasury Secretary Scott Bessent unexpectedly announced an increase in US bond repurchases to reduce long-term yields, making the situation facing Walsh even more complicated. Anwiti Bahuguna, Co-Chief Investment Officer of Northern Trust Asset Management, said: “Obviously, Walsh tends to say less rather than more. But the market requires a certain level of transparency and communication, such as why you are taking your current position and what you are seeing now, which is a reasonable question.” That doesn't mean the new chairman is likely to apologize for his actions. Walsh's supporters believe that the market overreacted to his July press conference. If the market's confidence in the Federal Reserve falls, inflation expectations should rise, but in reality, inflation expectations have risen only moderately, and are currently stable at a level consistent with the Fed's 2% target. They also believe that the rise in bond yields is being driven by multiple factors such as a surge in government and corporate borrowing. Randall Kroszner, a professor of economics at the University of Chicago and a Federal Reserve governor from 2006 to 2009, said that Walsh is only just beginning to push forward a communication mechanism reform with the goal of reducing clear guidance on future policy directions. “Sometimes markets make mistakes,” Kroszner said. When I worked at the Federal Reserve, the market made a lot of mistakes. There's always a run-in period when adopting a new approach.”
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