Sahm Slams Anonymous Sources, Warns Against Repeat of 72 Inflation Crisis

Former Federal Reserve economist Claudia Sahm has criticized Fed Chair Kevin Warsh's transparency, specifically calling out reports that rely on anonymous sources to explain his policy thinking. In a post on X, Sahm pointed out that market participants should not have to rely on unnamed officials to understand the central bank's direction. According to a Financial Times report, Warsh would be prepared to raise interest rates in September if upcoming inflation data remains hot and markets increasingly price in tighter monetary policy.

Sahm also warned against a repeat of the 1972 scenario, where former Fed Chair Arthur Burns eased policy ahead of President Nixon's re-election, leading to accelerated inflation. She argued that conversations between presidents and Fed chairs are expected but should be disclosed publicly.

Warsh's communication strategy has come under scrutiny since his first Federal Reserve meeting as chair in June. Sahm's comments add to the growing debate about transparency at the Federal Reserve.