Warsh charts a forward-looking path for Fed at Jackson Hole

KEVIN Warsh delivered his first speech at the annual Jackson Hole central banking conference as the new chair of the US Federal Reserve, under the pressure of remarkably high and unusually varied expectations.

Yet, in a powerful half-hour presentation, he went a long way towards assuaging doubts by deftly navigating both short and long-term issues. That is the good news. Less good is that the immediate media and market focus has been on the less consequential part of his speech.

We should not underestimate the tricky task Warsh faced in the run-up to his Friday (Aug 28) speech: striking the right balance in responding to criticisms about the market’s lack of understanding of his so-called “reaction function” – how the Fed would respond to changes in the economy under his watch.