Federal Reserve Chairman Kevin Warsh is set to deliver his much-anticipated keynote address in Jackson Hole, where markets are trying to predict what he will say on key issues affecting the economy and monetary policy.
This year's event is titled "Financial Innovation: Implications for Payments and Policy."
Warsh, like previous Fed chairs, has used this speech as an opportunity to discuss broad policy initiatives, but this time he may focus on higher-level issues rather than the nuts and bolts of the economy.
Markets are looking for Warsh to outline the conditions under which the Fed might adjust rates.
His approach so far has emphasized market direction, making it hard to predict what he will say.
Warsh has set up five task forces aimed at examining Fed functions.
Among their tasks are assessing how policymakers view inflation, the balance sheet, data points influencing decisions, technology-related issues, and communications.
His approach, which is more hands-off than recent predecessors, could generate mixed reviews.
Market Impacts
One question raised by Warsh is how inflation occurs and how monetary policy affects it.
If he focuses solely on broader structural themes, markets may interpret this as a dovish stance.
In such a case, a sell-off in long-dated Treasuries is expected.
Warsh needs to be more specific in articulating his thoughts.
