Fed Chair Kevin Warsh is actually managing U.S. debt costs not inflation, economist says, as interest rates threaten to top GDP growth soon

Trying to pin down Kevin Warsh as a hawk or a dove has been tricky with his statements and actions puzzling Wall Street.

As President Donald Trump’s hand-picked Federal Reserve chairman, Warsh was expected to lean toward looser monetary policy. Then he declared that inflation was a “choice,” suggesting a tougher approach.

Over the summer, he suggested looking at alternative inflation gauges and that the bond market would do some of the Fed’s tightening work, hinting as less aggressive policy.

But he delivered a hawkish speech at the Jackson Hole conference in August, and led the Fed to a unanimous rate hike in September.

Last week, he held off on backing another rate hike, despite inflation heating up again, with his lack of explanation and refusal to offer any hints about the next policy decision producing an overall dovish effect.

But Robin Brooks, a senior fellow at the Brookings Institution, said asking whether Warsh is a hawk or a dove is the wrong question. Instead, he views all the mixed messages from the Fed chair through a different lens, arguing the hot inflation readings can’t rationalize Warsh’s statements.

“We’re not in hawkish or dovish land. What’s happening is yield curve management, which itself is a function of how........

© Fortune