Warsh's Inflation Instincts Face Crucial Test at Jackson Hole

Kevin Warsh, the new chair of the Federal Reserve, has been tight-lipped about interest rates since taking office five months ago. As he prepares to give his first speech at Jackson Hole on Friday, market participants are eager for any hint on where he stands on inflation.

Warsh's past forecasts suggest he is inclined towards inflation risk, which could mean higher borrowing costs and a slower economy. During his time as a Fed governor from 2007 to 2011, Warsh consistently worried about inflation more than his colleagues, but prices remained below target for most of the following decade.

Unlike his predecessors, Warsh refuses to submit dot-plot projections, calling them 'abysmal'. However, his own buried forecasts reveal a different picture. He roots inflation less in traditional demand signals and more in supply-side factors and government policy.