Warsh Warns of Policy Tightening Risks Amid Treasury Bond Buybacks

Kevin Warsh recently spoke at Jackson Hole, emphasizing the need for Federal Reserve policy neutrality in light of Treasury's expanded bond buyback efforts. These efforts have pushed up long-term yields, with 10- and 30-year rates increasing. Despite this, long-term rates remain rangebound, and inflation shows underlying improvement.

Warsh suggests avoiding forward guidance or alignment with the Treasury to let market reactions guide policy. He notes that inflation expectations are anchored but cautions that policy is not yet tight enough for a quick return to target inflation.