Bank of America warns Kevin Warsh’s Fed strategy ‘works like a tax on the economy’ — how to protect your money

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Kevin Warsh has wasted little time reshaping the Federal Reserve since taking over as chair earlier this year.

At his first press conference in June, Warsh made clear that he wanted to pull back from the central bank's reliance on "forward guidance" — the practice of signaling where interest rates could be headed — arguing that it is not "well suited" to the current economic environment (1). He has also launched a broader review of how the Fed approaches inflation and monetary policy.

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That shift was on display again after the Fed's July meeting, when policymakers voted 9-3 to keep the federal funds rate at 3.50% to 3.75% (2).

While three officials favored a rate hike, Warsh declined to signal what the Fed might do next. He instead pointed to the sharp rise in bond yields since the Fed's previous meeting and said policymakers would act when necessary.