Kevin Warsh is living up to his hawkish reputation.
The Federal Open Market Committee opted to hold rates steady at its July meeting, the second with former Wall Street executive Warsh at the helm. FOMC leaders voted 9-3 in favor of the decision, with the dissenters hoping for a quarter-point hike.
From dissents to Warsh's communication style, here are Business Insider's biggest takeaways.
Members are ready for a hike
In the first split vote of the Warsh era, three FOMC members — Beth M. Hammock, Neel Kashkari, and Lorie K. Logan — dissented, saying they would prefer to raise rates.
Warsh described the committee's meeting as "a good family fight," and "there was nothing inertial" about their decision. He and other FOMC members carefully considered the status of the Iran War, stubborn inflation rates, patterns in the job market, and financial market moves.
Monetary policy isn't a preset course, and the FOMC won't make another rate decision until late September, but Warsh emphasized that he remains committed to the Fed's longstanding 2% inflation goal.
He said the central bank's dual mandates of low inflation and a healthy job market can go hand-in-hand, but progress will take time.
"I don't believe that either part of our mandate is generally at war with the other part," he said. "I do not believe that price stability and full employment is an either-or proposition."
Warsh is trademarking his communication style
Beginning with saying "good day" instead of former Chair Jerome Powell's signature "good afternoon" at the top of press conferences, Warsh is developing a clear communication style.
The new chair is notably opposed to forward guidance, preferring that markets and businesses react to real-time financial information. This strategy makes much of the FOMC's recent news releases appear especially optimistic. Today, the group touted that "Economic activity is expanding at a solid pace despite elevated uncertainty."
The July interest rate announcement was nearly verbatim to the June statement, with less than a sentence changed between the two documents. It's a departure from previous FOMCs, who typically provided detailed economic analysis alongside each decision.
The next test of Warsh's communication strategy will be at the Jackson Hole Economic Symposium in August, at which Warsh will give the keynote address. While he hasn't written it yet, the chair said he will focus on big questions.
"What's really happening with productivity? What's really happening in demographics? What's really happening to the global economy amid the shocks?" he said.
He joked that his communications task force — alongside his task forces on jobs and productivity, data, inflation, and the balance sheet — will be his first call when he needs speechwriting help.
The FOMC is letting markets take the lead
Warsh, a former Wall Street executive, has been vocal about wanting the Fed to operate more like a corporation. In part, this goal includes overhauling communications and data sources. But Warsh also wants markets to take the lead, rather than following the Fed's moves.
"Prices reacted in real-time to incoming information, and the reduction in forward guidance might have been a factor," he said. "Market participants are learning to play the ball, and not the referee."
Allowing markets to react to the news — and economic shocks as they come — instead of Fed projections is a recipe for a healthier economy, he said.
After all, Warsh said, "the path to central bank heaven" requires delivering on price stability. He and the FOMC are focused on achieving that 2% goal.
