Incoming Fed Chair Kevin Warsh Proposes Reducing Central Bank Communications

Kevin Warsh, the Federal Reserve's incoming leader, said during his confirmation hearing last month that Fed officials speak quite frequently and that truth-seeking is more important than repetition. Warsh stated that if officials hold a press conference, they should deliver important news.

He is scheduled to begin his four-year term on Monday and proposed a new framework and new tools for communications, though he did not specify what those changes would include.

For most of its 113-year history, the Federal Reserve kept interest-rate decisions largely private. There were no policy statements, routine public comments, or news conferences by the chair. That changed under Fed Chair Alan Greenspan, who introduced the post-meeting policy statement in 1994.

Subsequent chairs expanded communications, with Ben Bernanke holding the first formal news conference in April 2011.

Mester, who served as president of the Federal Reserve Bank of Cleveland from 2014 to 2024, told CNN that communication is not trivial and that there may be enhancements to make it more effective. A Brookings Institution survey released this month found that economists and analysts want the Fed to continue press conferences after each rate-setting meeting.

Derek Tang, an economist at Monetary Policy Analytics, said the Fed sending signals on future actions is useful because it quickly affects financial conditions. Warsh cannot control communications from the 12 presidents of the regional Fed banks. A third of respondents in the Brookings survey said regional presidents should speak in public less frequently.