Warsh's Transparency Dilemma at Jackson Hole

Kevin Warsh's debut major address as Federal Reserve chair has become an unexpected test of his pared-back approach to communication. At the annual central bank symposium in Jackson Hole, Wyoming, where he is scheduled to appear on Friday, Warsh will face criticism that he has been less than transparent about his economic outlook.

Warsh's refusal to offer investors explicit signals about future rate moves has put a strain on financial markets since a rocky press conference last month prompted a selloff in bonds. Economists and analysts have repeatedly accused him of overcorrecting in his effort to reduce the Fed's public messaging.

Anwiti Bahuguna, co-chief investment officer at Northern Trust Asset Management, said that while Warsh clearly prefers brevity, markets reasonably expect some transparency about the Fed's current stance and its assessment of present conditions. However, supporters of Warsh contend that the market's response to his July press conference was exaggerated.

Randall Kroszner, an economics professor at the University of Chicago who served as a Fed governor from 2006 to 2009, suggested that Warsh is merely beginning a broader effort to curtail explicit forward guidance. Kroszner noted that markets occasionally misjudge situations and added that any new approach inevitably brings initial friction.