Fed may adopt leaner communications strategy under Warsh, says Deutsche Bank

Federal Reserve communications are likely to become shorter, less reliant on forward guidance and more focused on longer-term economic narratives under new Chair Kevin Warsh, Deutsche Bank analysts wrote, as the central bank reviews how it communicates monetary policy.

Deutsche Bank wrote that Warsh's newly announced communications task force is likely to produce "notable innovations" beginning next year, with most of its work expected to be completed by the fall and recommendations potentially finalized by year-end.

They believe that Warsh's first Federal Open Market Committee meeting signaled a preference for "regime change rather than incremental adjustments" to how the Fed communicates policy.

Among the changes Deutsche Bank expects are shorter post-meeting statements that omit forward guidance and detailed descriptions of the Fed's policy reaction function. The bank wrote that Warsh's streamlined statement following the June FOMC meeting is likely to become the standard during his tenure.

Deutsche Bank also wrote that meaningful forward guidance is unlikely under Warsh, citing his long-standing criticism that such guidance has little role outside periods when interest rate

Fuente original: Yahoo Finance (https://finance.yahoo.com/economy/policy/articles/fed-may-adopt-leaner-communications-140000544.html)