Warsh announces task force to review Fed monetary policy.

After the Federal Open Market Committee (FOMC) to maintain the basic interest rate in the United States in the range between 3.50% and 3.75% per year this Wednesday (17), as widely expected by the market, the president of Federal Reserve (Fed)Kevin Warsh announced the creation of a task force to review key aspects of the monetary authority's performance. In his first press conference as head of the US central bank, Warsh reported that the work will focus on five areas: communication, management of the Fed's balance sheet, use of data sources, productivity and the labor market, and the inflation framework. According to the chairman, each of these topics will be analyzed in the coming weeks, with the aim of identifying improvements and presenting proposals for updating the conduct of monetary policy. In the case of the review of the inflation framework, Warsh stated that the team should focus its efforts on understanding the structural factors that drive price increases in the US economy. The chairman also highlighted changes in the way the central bank communicates. Commenting on the statement released after the interest rate decision, he noted that the text was significantly reduced. "It's shorter, simpler, and dispenses with some things that were normally said," he stated. The statement from this meeting had 140 words, compared to 341 words in the previous version. Warsh also addressed the economic projections released by the Fed, known as the "dot plot," confirming the perception of some analysts that it had not sent its individual estimates for interest rates and economic activity. Another highlight was the absence of the so-called… forward guidance — an instrument used by the central bank to signal possible future directions for monetary policy. According to the Fed chairman, the omission was deliberate. In Warsh's assessment, the current stage of the economy and monetary policy is not appropriate for releasing advance guidance on the monetary authority's next moves.

This text was translated by machine from Brazilian Portuguese.