How Kevin Warsh is rewiring the Fed

AI Summary

Indonesia's Destry Damayanti nominated as central bank chief Federal Reserve chairman Kevin Warsh is attempting a high-wire act: He's trying to fundamentally rethink the central bank's approach to guiding the economy, while also using its standard policy toolkit to bring down stubbornly persistent inflation. A market blowup late last month showed the perils of trying both at the same time. The big picture: Markets sold off and the economic commentariat was sharply critical of a Warsh press conference on July 29, in which he was vague about the possibility of raising interest rates to combat inflation. Some analysts saw it as evidence of a lack of commitment to quashing inflation. To Warsh allies, it was a brief bump in the road toward a more credible Fed.