Kevin Warsh, the new US Federal Reserve chair, is facing a critical test this week amid anxiety in government bond markets. Concerns are rising over inflation and Donald Trump’s tax and spending plans as the world’s most powerful central bank prepares for its annual Jackson Hole conference.
Analysts indicate that bond traders will be looking for signals from Warsh regarding the Fed's commitment to fighting inflation. However, Warsh has indicated a reluctance to use his speech on Friday for the “more traditional setup” of hinting at how the US central bank might respond to inflationary pressures when officials next meet to set interest rates in September and December.
Instead, Warsh has stated his Jackson Hole speech could be “focused on bigger questions,” including concerns over productivity and demographics.