Federal Reserve Chair Kevin Warsh opened the annual Economic Policy Symposium in Jackson Hole on Thursday, addressing the theme of financial innovation and its implications for payments and policy.
Warsh, a former Fed governor, used the forum to highlight tensions between market expectations and the central bank’s communication strategy. In remarks to Congress in July, he noted that some market participants had grown dissatisfied with the reduced flow of information from the Fed, saying, 'My message to them is: play the ball, don’t play against the Fed.'
The symposium, hosted by the Federal Reserve Bank of Kansas City, convenes central bankers, policymakers and economists to discuss structural shifts in the financial system. Among the attendees are regional Fed presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas, all of whom dissented at the Federal Open Market Committee’s July meeting, voting against the decision to hold interest rates steady.
Core inflation, as measured by the Personal Consumption Expenditures price index, rose 3.3% year-over-year in July, remaining above the Fed’s 2% long-term target. The last time core PCE fell below 2% was in February 2021. The FOMC maintained its policy rate at the July meeting, but the dissenting votes underscored divisions over the appropriate stance amid mixed labor-market and energy-price dynamics. Nonfarm payroll data for July showed a weaker-than-expected reading, while elevated oil prices continue to reflect geopolitical risks tied to the U.S.-Iran conflict.
Long-term U.S. Treasury yields have surged, with the 30-year bond yield reaching its highest level in more than 19 years earlier this month. In response, the U.S. Department of the Treasury announced an increase in the volume of long-term bond repurchases to manage market conditions.
