#Gate股票观点挑战 Global markets await his remarks tonight

At 22:00 Beijing time on August 28, Federal Reserve Chair Kevin Warsh will take the stage at the Jackson Hole global central bank annual meeting.
Market attention to this speech may already exceed the normal range of previous years—because this will be Warsh’s first major speech at the Jackson Hole central bank annual meeting since becoming Fed chair, while markets are increasingly confused about the Fed’s policy path.
Unlike the communication styles of the previous Fed chairs, Warsh has deliberately downplayed “forward guidance.” Since taking office, “less is more” has become his intentional communication strategy.
Warsh once used a vivid analogy, saying, “The market is learning to ‘watch the ball,’ rather than ‘watch the referee.’” But when the “referee” makes fewer gestures, the market may not necessarily become more at ease.
On the contrary, Warsh’s refusal to provide answers is bringing the market more and more questions.
First is the uncertainty surrounding the interest-rate path. Will the Fed raise rates or not? Market expectations continue to swing.
Second is the uncertainty surrounding the policy framework. What the market really wants to know is what combination of inflation, employment, and economic data would trigger an adjustment in the Fed’s monetary policy.
Third is the most sensitive issue: credibility. Warsh’s July monetary policy press conference created a communication “accident.” He failed to clearly explain why the Fed chose to keep interest rates unchanged, instead suggesting that “the market should raise rates for the Fed,” prompting investors to question the Fed’s determination to fight inflation.
As a result, investors sold long-term U.S. Treasuries, and the 30-year Treasury yield briefly rose to its highest level since 2007.
More troublingly, the U.S. Treasury’s emergency “rescue” effort failed; it not only had no substantive effect but further damaged policy credibility.
So tonight, when Warsh takes the stage at Jackson Hole, it will concern not only monetary policy guidance but also be a major “test” of the Fed’s communication ability and policy credibility.

So, what will Warsh discuss?
This year’s Jackson Hole central bank annual meeting is themed “Financial Innovation: Implications for Payments and Policy.” Warsh previously compared this speech to “a blank sheet of paper,” saying that its topic had not yet been finalized.
Warsh’s first task is to repair the “crack” in trust. CICC believes that Warsh’s most important task this time is to send clear signals to the market and rebuild the Fed’s credibility. To this end, he may need to convey several messages: first, reiterate that inflation risks have not been eliminated; second, stress that interest-rate tools remain the core means of addressing inflation; and third, state that if inflation data are too high, the Fed will further tighten policy.
Adam Posen, president of the Peterson Institute for International Economics, said that Warsh needs to make clear at this point that he is willing to take all necessary measures if inflation remains far above the Fed’s 2% target or begins rising again.
Second, Warsh needs to clearly explain the Fed’s “reaction function.” Warsh does not have to tell the market “what comes next,” but he must tell it “why this step is being taken.” If the Fed neither explains its current policy nor clearly outlines its policy framework, the market may ultimately have to seek its own margin of safety by pushing bond yields higher.
Guolian Minsheng Securities believes that Warsh need not disclose his subsequent policy inclination, but should tell the market under what combination of inflation, employment, and financial conditions the Fed would act, thereby filling the information vacuum left by the July policy meeting.
CITIC Securities also believes that this Jackson Hole meeting will be a window for Warsh to repair credibility. Potential directions could include moderately reducing ambiguity by providing a clearer explanation of his policy reaction function, clarifying market doubts over his July “talk without action” by citing reasons such as two consecutive months of moderate inflation, and disclosing the latest progress of the five major working groups in response to market concerns.
Third, can Warsh clarify the boundary between monetary and fiscal policy? Long-term Treasury yields have fluctuated sharply recently, and the market is closely watching whether Warsh will respond.
Guolian Minsheng Securities said that, fundamentally, the market expects the Fed to strictly clarify the functional boundary between monetary policy and fiscal debt management: monetary policy should focus on interest-rate regulation and serving inflation and employment objectives, while debt management should focus on optimizing the structure of debt issuance; the two should remain independent and not interfere with each other. If Warsh takes an ambiguous position on this issue, the market may worry that monetary policy is being “held hostage” by fiscal debt problems, Treasury risk premiums are likely to rise further, and volatility in long-duration assets will intensify.
Finally, it is also worth watching whether Warsh will explain his overall thinking and progress on reforming the Fed’s operating mechanism.
The global macro research team at Huatai Securities wrote in a report that, judging from the preparation time and process, the probability that Warsh will provide a relatively clear and credible long-term policy framework at this meeting is not high. After the Fed’s June 17 policy meeting, Warsh announced the formation of five working groups to study the current macroeconomic situation, structural changes, and directions for policy reform. The working groups’ core members gradually took their positions in July, and may need a period of observation and analysis before producing research conclusions with greater credibility and operability.