Investors were heartened on Friday by new Federal Reserve Chair Kevin Warsh's stated resolve to tame high inflation, but many on Wall Street remained unclear about how the U.S. central bank will react to economic changes in the months ahead. In a highly anticipated speech, Warsh said the central bank will "have work to do" if policymakers are not confident that underlying inflation is returning to its 2% target. He also indicated financial conditions do not appear restrictive and came closer than previously to acknowledging that interest rate hikes may be needed to ease price pressures.
Since starting as chair several months ago, Warsh has made clear he plans to pare back the Fed's communications, including no longer indicating the central bank's interest rate path through forward guidance, a position he re-emphasized on Friday.
