President Donald Trump's handpicked head of the Federal Reserve is already under the microscope before he gives his first major address at the Fed's annual meeting.
According to a report from the New York Times, Fed Chair Kevin Warsh will be watched closely by skeptics who believe he has been far too mysterious about his plans and whether he will let Trump pull his strings.
His speech, scheduled for Friday at 10 a.m. Eastern, is the biggest draw of the three-day conference hosted by the Federal Reserve Bank of Kansas City.
The address will give Warsh an opportunity to "articulate his own framework for thinking about the economy, the policy choices in front of the Fed as it contends with elevated inflation and how he is assessing seismic changes," and allow him to address significant economic shifts, such as productivity gains from artificial intelligence, that could influence the country's growth prospects.
However, Warsh's intentional vagueness about his economic views has created confusion "both inside and outside the Fed," overshadowing his broader ambitions to enact sweeping changes at the institution.
Anil Kashyap, an economist at the University of Chicago's Booth School of Business, said clarity is "essential."
"You won't accomplish anything if you are unwilling to tell people how you think the economy works," Kashyap told the Times. "You have to have a mechanism that you think explains why if you're going to do something differently, it's going to turn out better. And that means you need to pick a lane on various issues."
"The honeymoon's over," Kashyap added.
A majority of Fed officials maintain their forecast that inflation will decelerate in the latter half of the year, suggesting the central bank can afford to be patient before taking action. Markets have "started to question" Warsh's willingness to follow through on inflation concerns, particularly given the administration's worries about borrowing costs and affordability challenges ahead of the midterms.
Deirdre Dunn, head of global rates at Citigroup, said market confidence has shifted, when speaking with the Times.
"Earlier this summer, the market felt more confident that the Fed would walk the walk — now, there is some slight jitteriness that the perceived hawkishness from Warsh was more about talking the talk," Dunn said.