Warsh's Communication Strategy Sparks Market Uncertainty

David Rubenstein thinks Federal Reserve Chairman Kevin Warsh may need to adjust his communication strategy. According to Rubenstein, markets like information, and Warsh's decision to withhold details about monetary policy has created volatility.

Rubenstein, a friend of Warsh's who co-founded Carlyle, acknowledges that it's too early to judge whether Warsh's approach will work. However, he notes that the market is currently pricing nearly a 90% probability of a rate hike this week, following last week's hot inflation reading.

Goldman Sachs economists expect a quarter-point hike, and Rubenstein thinks Warsh may eventually discover that withholding information creates more volatility than independence. While Warsh has softened his approach slightly by explaining his economic framework at Jackson Hole, investors are still uncertain about how he will react to changing economic conditions.