'A serious mistake': Moody's Analytics economist says the Fed is putting the economy at risk with its silence

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Federal Reserve chair Kevin Warsh wants the central bank (1) to say less about where the economy is headed.

But one prominent economist argues that the approach could hurt the U.S. economy by leaving financial markets in the dark about the Fed's next moves.

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On July 29, Fed officials voted 9-3 (2) to keep interest rates unchanged in the range of 3.5% to 3.75% for the fifth time in a row. The three dissenting voices came from regional bank presidents who favored a quarter-point rate increase to address energy supply shocks that have pushed up gasoline prices and the cost of a range of other goods.

At a news conference following the conclusion of the two-day meeting, Warsh declined to say what conditions would prompt the Fed to raise interest rates. Financial markets swiftly reacted, sending the yield on the 30-year Treasury bond to 5.22% on July 29 — its highest level since 2007.