Federal Reserve Chair Kevin Warsh has revealed himself as a monetarist, or at least a sympathizer with the doctrine, during the Jackson Hole symposium in August and again at his September 16 press conference following the FOMC meeting. This marks a dramatic departure from his predecessor Jerome Powell, who consistently rejected monetarism’s core tenets. Monetarism holds that the money supply has a major influence on asset prices, economic activity, and the overall price level. During his press conference, Warsh stated that the Fed cannot address individual prices, that data points are too noisy for month-to-month forecasts, and that the concept of a neutral interest rate has no bearing on practical decision-making. The authors describe this evolution as a potential « seismic shift » for the Fed.
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