Furman: Warsh Should Talk Less, Act More

Harvard economist Jason Furman analyzes the Federal Reserve's latest decision to hold rates amid persistent inflation, dissents from hawkish members, and the impact of tariffs and geopolitics. He discusses the importance of Fed credibility, the mixed signals from financial conditions, and warns that Chair Warsh's reluctance to provide forward guidance may lead to more aggressive rate moves in the future. - Fed held rates steady but internal dissents signaled a desire to hike. - Inflation has been above 2% for five years, recently boosted by tariffs and the Iran conflict. - Wage growth remains contained, reducing the risk of a wage-price spiral. - The stable labor market allows the Fed to concentrate on its inflation mandate. - The 30-year yield spike reflects market expectations of future rate hikes. - Furman argues that less forward guidance could force the Fed to act more aggressively on rates. - Maintaining Fed credibility is essential as inflation remains high.