Warsh Shifts Focus to Broader Financial Conditions Amid Inflation Concerns
Federal Reserve Chair Kevin Warsh has shifted the central bank's policy framework to focus on broader financial conditions, according to recent statements. The move comes as officials delay major balance-sheet changes and monitor inflation above target.
The Federal Open Market Committee voted unanimously to raise the federal funds target range by 25 basis points to 3.75%-4% in a September 16 decision. Warsh emphasized credit availability, market prices, Treasury trading conditions, the dollar, commodities, and other measures of financial conditions in his August speech.
Warsh noted that broad financial conditions are difficult to characterize as restrictive and stated, 'I'm not in the forward guidance business.' He added, 'We removed a dose of accommodation so that financial and credit conditions would be more consistent with our ultimate objectives.'