Warsh's Rate Decision Sparks Credibility Concerns

The new Federal Reserve chairman, Kevin Warsh, has caused concern among investors after his latest rate decision. The market is questioning whether he will take action to dampen inflation.

Bank of America's U.S. economy team described the tepid response to Warsh's July 29 press conference as a 'central bank inflation credibility shock.'

The S&P 500 rose 5.5% from that date through Sept. 8, but the bond market is pricing in the uncertainty rather than stocks.

Warsh refused to specify what would trigger a rate hike, leading some to speculate he might not raise rates at all.