Kevin Warsh made his first outing as Federal Reserve Chairman on Wednesday, and one can hope this is how he means to go on. The public saw initial evidence of, and a considered process for, the change the Fed needs.
The central bank’s policy decision—to maintain the target fed funds rate at 3.5%-3.75%—hadn’t been in doubt before the Federal Open Market Committee meeting. The news was that Mr. Warsh managed to corral a unanimous 12-0 vote in favor despite the previous public views of some governors that a rate increase was called for.
One manifestation of the Warsh influence was the statement. Delivering only four terse paragraphs, the FOMC cut the prolix forward guidance it has offered about whether it might raise or lower rates in the future.
The FOMC did publish its quarterly summary of economic projections, including the dot plot of guesses about the path of inflation and interest rates. These showed that participants are growing more concerned about persistent inflation. But Mr. Warsh didn’t submit his own projections, consistent with his longstanding skepticism about the dot plots. He conveyed his view with a simple declaration of monetary policy independence: “The Committee will deliver price stability.” Take that, Elizabeth Warren.
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