- Key insight: Federal Reserve Chair Kevin Warsh's push to limit his own public speaking comes as other members of the Federal Open Market Committee are speaking more than ever — and markets are listening to them, too.
- Expert quote: "The amount of talking about monetary policy that I did back then in the '90s was completely trivial compared to what many members of the FOMC do today. It was a peanut shell compared to a tree." — Alan Blinder, former Federal Reserve Vice Chair
- Forward Look: The efficacy of Warsh's new communications approach will be put to the test following this week's FOMC meeting, in which a resounding majority of market participants expect a 25 basis point rate hike.
Kevin Warsh wants to make the Federal Reserve less talkative — but he's not the only Fed official that markets are listening to.
Long before
"A quieter Fed, more purposeful in its communications, is better able to meet its objectives," Warsh said during a speech last month — one of three sets of prepared remarks he has delivered since being sworn in. "And we can be held accountable for delivering on our remit — the only true test of our credibility."
He's taken steps to achieve this vision through his own communications strategy; delivering fewer speeches than other new chairs and avoiding forward-looking commentary at all costs. But Warsh can only control what he does, and reducing the volume of Fed speeches overall would take a coordinated effort across the Federal Reserve system — or an iron-fisted crackdown to reverse a decades-long effort by the central bank to be more transparent about its inner workings and machinations.
An American Banker analysis of more than 8,000 speeches and statements from Federal Open Market Committee members shows that the annual output of official commentary has more than doubled since 1979, but the growth has been driven almost exclusively by members of the FOMC other than the chair.
Under Fed Chair Paul Volcker — whose anti-inflation campaign raised the public profile of the position to new heights in the 1980s — the 19 members of the FOMC averaged 90 speeches per year, according to data aggregated from the Federal Reserve Archival System for Economic Research, or FRASER. Volcker, who served from 1979 to 1987, accounted for more than one in five of those entries.
For three-plus decades, the volume of public statements by FOMC members climbed steadily, peaking at 238 addresses and statements in 2013. Then-Chair Ben Bernanke's tenure saw an average annual output of more than 200 prepared remarks by FOMC members. It was a period that included the subprime mortgage crisis, a near-collapse of the global financial system, novel monetary policy interventions and an overhaul of bank regulation. Fed officials had much to discuss, but even in that era of heightened interest in the Fed, Bernanke accounted for just 13% of FOMC members' public statements.
Under Chairs Janet Yellen and Jerome Powell, the number of speeches dipped slightly, to an annual average around 196 between 2014 and 2025 — reflecting, in part, periods of
Talk is cheap
The volume of speeches alone does not tell the whole story of how the Fed has come to explain itself over the last 40 years. The FRASER database, which is maintained by the Federal Reserve Bank of St. Louis, contains only prewritten speeches, official statements, congressional testimonies and transcripts from a handful of press conferences from Federal Reserve Board governors and the presidents of the 12 regional reserve banks. It does not account for unscripted public conversations and media interviews, which have become an increasingly popular way for non-chair FOMC members to deliver messages during the past 20 years.
"The CNBC, Bloomberg opportunities to voice your views weren't there," said Don Kohn, vice chair of the Fed from 2006 to 2010 and a longtime staffer within the Federal Reserve System.
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Non-chairs have also become more apt to discuss monetary policy in recent decades. Under Volcker and his successor, Alan Greenspan, more than 43% of non-chair speeches made no mention of "monetary policy", compared to less than 27% under Bernanke, Yellen and Powell.
"The amount of talking about monetary policy that I did back then in the '90s was completely trivial compared to what many members of the FOMC do today," said Alan Blinder, a former Fed governor who served as vice chair from 1994 to 1996. "It was a peanut shell compared to a tree."
Supporters of the current approach to communications say it embodies the Fed's decentralized design as a federated system of reserve banks rather than a monolithic central bank. Presidents of those reserve banks are meant to be conduits between the Washington, D.C.-based FOMC and their home districts. Governors, meanwhile, are given 14-year terms in hopes of minimizing the influence of partisan politics on the board. Airing a range of views from this diverse group brings transparency and credibility to Fed as a whole.
In a world of round-the-clock analysis and outside commentary about economic data and its potential impact on monetary policy, James Bullard, president of the St. Louis Fed from 2008 to 2023, said it is healthy for Fed officials to be active in those discussions.
"This is very important for pricing hundreds of trillions of dollars of assets globally, so it's not such a bad thing to have constant running commentary, and I think it's better to have it not be from the chair," Bullard said. "The chair's microphone is too large and should be reserved for general statements about the position of U.S. monetary policy and general statements about the economy. The members of the committee can provide more nuance."
Still, too many voices expressing too many diverging views can be problematic, leading to what is known as the "cacophony problem" — when noisy discourse inadvertently causes market participants to draw the wrong conclusions about the direction of policy.
"The markets have no choice but to listen to the disparate voices coming out of the FOMC and try to weigh them against each other," said Robert Hetzel, senior affiliated scholar at the Mercatus Center and a former Richmond Fed economist. "It works when the Fed has credibility and there are no big shocks, but when there is a chaotic cacophony of voices where the members are saying different things and there are no clear rules for how the Fed will respond to certain developments, markets can become fragile."
Meet the press
The remedy to this during the Fed's era of expanding commentary has been for the Fed chair to speak on behalf of the committee as a whole, to summarize the group's conclusions and outline its thought processes. This approach led to the creation of the post-FOMC press conference, first as a quarterly affair under Bernanke before expanding to all eight annual meetings under Powell.
Kohn said the prepared statements read during press conferences and ad hoc responses to questions — neither of which are included in the FRASER database — provide the chair an opportunity to explain the actions of the committee while maintaining personal control over how that information is presented. Other FOMC members are prohibited from discussing decisions publicly until 11:59 p.m. the following day.
"Jay Powell took very seriously the idea that his job was to explain what the majority of the committee had done at the last meeting, and but he gets to frame that explanation with that press conference. The chair gets to answer the questions," Kohn said. "The press conference has, to some extent, yanked back the scene-setting, the story, the narrative to the Fed chair."
Warsh, in his first two press conferences, has declined to engage in such narrative building. He has said that detailing what the committee is focused on or signaling how it might respond to certain developments amounts to "forward guidance" — a practice he sees providing little benefit to markets at the risk of locking the FOMC into a predetermined course of action.
"Providing forecasts to illustrate the Fed's reaction function works better in theory than in practice, better in the lab than in the field," Warsh said last month. "I'm not alone in noticing that forward guidance in 2021, to cite one example, might well have slowed the policy response to high inflation."
Warsh's preference is for market participants — bankers, securities traders and investors — to make their judgments about the economy and financial conditions and adjust their holdings accordingly. This has happened, albeit with unclear results.
Heading into the FOMC's last rate decision on July 29, bond yields were up sharply, as many investors braced for an expected rate hike. Similarly, the CME Group's FedWatch tool showed 31% of federal funds rate futures contracts were pricing in a 25 basis point increase the day before the committee's vote — a 9-3 split in favor of keeping the benchmark rate between 3.5% and 3.75%.
Warsh described the market volatility ahead of the meeting as
Yet, bond yields
"The June FOMC meeting began with a very strong emphasis on price stability, but the conversation about how to achieve that goal was lacking in July," Dhingra said. "Actions speak louder than words, and the words did their part in June, but the action expectations were not met in July."
Equal and opposite reaction
Since then, market expectations have bounced around based on incoming data and Fed speeches. Once favoring a hold by a rate of roughly two-to-one, the fed futures market flipped to 66% in favor of a hike following Warsh's keynote address at
The odds shifted back to 50-50 following a
In an analyst note, EY-Parthenon Chief Economist Gregory Daco said the heightened reactiveness to individual data points and FOMC participant speeches is the result of the lack of clarity about the committee's reaction function from Warsh.
"The communication void has instead been filled by other policymakers, including New York Fed President [John] Williams, who also serves as FOMC Vice Chair, and Governor Waller. In recent speeches, both expressed the view that if core PCE inflation were to trend around 0.2% month-over-month, they would not favor a rate hike," Daco said. "Markets have mistakenly interpreted this as signaling that every inflation print is a test of whether the Fed will tighten."
Warsh's Jackson Hole speech was broadly seen as hawkish, meaning more inclined to raise rates to combat inflation. At least t
Blinder said the strength of market agreement about an expected outcome is not an indication of its accuracy, and noted that during his tenure, markets often made mistakes.
"Markets were prone to get it wrong and any number of times I went to Greenspan and said 'You could correct this misinterpretation from the markets with one speech,' but he wouldn't do that," Blinder said. "Warsh seems inclined to do the same."
'Good luck going back'
Recent history has shown that the Fed chair does not need to lead the charge on communications. A sitting chair has not been the leading speech maker since 2012, when Bernanke spoke 25 times — and even then, only 18 of his speeches mentioned monetary policy, one less than then-San Francisco Fed President John Williams.
Instead, the Fed chair's declining contribution to the broader body of central bank communication shows that any gap left by a further pullback will be readily filled by other FOMC participants.
Thus far, Warsh has not weighed in on the volume of commentary by other Fed officials, nor has he outlined a holistic strategy for public speaking engagements. Such conversations are on hold until the FOMC hears back from his task force on communications later this year. Whatever recommendations that group makes, Warsh said, Fed officials will have the final say over policy changes.
It could be the case that the 18 other members agree with Warsh and they, collectively, agree to a narrower approach to communications. Short of that, Warsh could attempt to curtail speech-making less formally, as other Fed chairs have in the past.
After FOMC meetings, Greenspan often encouraged other members not to discuss next steps, Kohn said, a directive against "forward guidance," albeit by another name.
Governors and reserve bank presidents typically respected this request, Kohn said, but over time the line between explaining the Fed's policy and individual committee members championing their own preferences has become blurred. For this reason, he believes revisiting the Fed's policies as a worthwhile exercise.
"The task force will bring forward whatever its recommendations are and that will start or continue a conversation about what's appropriate for people to say and when," Kohn said. "We'll have to see."
Yet, others will readily note that communication practices have changed substantially in recent decades — and for good reason. In a livestreamed interview with Reuters earlier this month, Waller said the secrecy and obscurity that central bankers sowed into their public remarks for years created frictions and raised the likelihood of markets being surprised by policy changes.
Waller, like others, said a return to less transparency would be a mistake.
"That used to be the old model — never explain, never apologize. Good luck going back to that world," Waller said. "It just doesn't work, and it's not a good model for thinking about economic welfare."
