Kevin Warsh looks ready to rewrite the Fed's rules

Kevin Warsh, the Fed's new chair, has a reputation for being tough on inflation. Bloomberg/Getty Images Kevin Warsh succeeded Jerome Powell as chair of the central bank. The Fed opted to hold rates steady in Warsh's first meeting, as expected. Warsh seems poised to change some long-standing FOMC traditions. Kevin Warsh has taken the podium — and he plans to make some major changes at the central bank. The Federal Open Market Committee opted to hold rates steady at its June meeting, the first with former Wall Street executive Warsh as chair. FOMC leaders voted unanimously for the hold, with half predicting at least one rate hike by year's end. But what stuck out from Warsh's first press conference wasn't monetary policy; it was how much he plans to change long-standing Fed traditions. Fewer forecasts, more task forces Warsh chose to eliminate the Fed's forward guidance in June's statement. That statement was bare-bones compared to his predecessors', with limited detail on how and why the Fed made its decision, a style that had been customary under Jerome Powell's tenure . The committee still published a quarterly dot plot showing FOMC members' estimates for where interest rates would end up in the coming years — though Warsh said he abstained from submitting his own prediction for future rates. It's unclear what economic predictions the FOMC will make going forward. While critics worry that this approach will reduce the central bank's transparency , Warsh hopes markets will rely less on Fed moves. He notably didn't talk much about Fed independence, which has been a key topic at previous meetings. "I think financial markets perform best when they react to incoming data," he said. "The more that markets are paying attention to what's happening in the real economy — what's good data, and what's less good data — the more financial markets can price what they believe is the most likely and what is the tail risk." Beyond forecasts, Warsh said he wants to reevaluate the data the Fed uses to make decisions, relying more on real-time numbers and less on "echoes of history," like the often-revised monthly jobs report. He added that trends matter more than specific numbers, and he wants to phase out the "old-fashioned survey methods" that the central bank uses. To bring the Fed into the future, Warsh has one shining solution: Task forces. He said he is appointing independent groups of economic experts, partnered with FOMC leaders, to oversee his new initiatives. The task forces will focus on the Fed's handling of data, jobs and productivity, communication, inflation, and the balance sheet. The new chair said he is impressed by the committee and feels confident in the Fed's ability to fulfill both sides of its dual mandate. He added that his plan doesn't mean outsourcing decisions, but he expects more structural changes. "We have a task force for that," Warsh said. Read the original article on Business Insider