{"text":[[{"start":5.1,"text":"Each year in late August, falling overnight temperatures in western Wyoming send trout in the Snake River into a feeding frenzy before winter. These optimal fishing conditions first led Paul Volcker, former Federal Reserve chair and an avid fly fisherman, to host the Fed’s annual conference there. The Jackson Hole symposium convenes central bankers, finance ministers and economists to discuss monetary policy, network and, occasionally, cast a line."}],[{"start":30.98,"text":"Like the trout, the current Fed chair Kevin Warsh has a difficult few months ahead — and many market participants will be scouring his Jackson Hole speech on Friday for signals on how he plans to deal with them. The ongoing conflict with Iran injects uncertainty into markets, and oil prices remain above prewar levels. Inflation is running persistently above the central bank’s 2 per cent target. US government debt is climbing ever higher and is made more burdensome by higher yields."}],[{"start":58.38,"text":"The massive spending on the AI build-out appears to be pushing up borrowing rates, crowding out other sectors of the economy, and raising important questions for monetary policymakers. Treasury secretary Scott Bessent’s interventions in the bond market add an additional layer that threatens to complicate how monetary policy is set."}],[{"start":76.08,"text":"But some of the Fed chair’s challenges are of his own making. Warsh has long expressed a distaste for central banks projecting forward guidance to markets, but his sparse communication style has added to confusion in markets. Amid limited insight into his thinking on key questions about the state of the economy, investors have sent long-term bond yields to their highest levels since 2007. The IMF has released a pointed note on “Current Issues in Forward Guidance.” Warsh himself seems to be aware of his failure to communicate successfully his commitment to price stability to markets but is unmoved."}],[{"start":109.52,"text":"Much of this is, of course, by design. Warsh has focused on how higher interest rates on longer-dated bonds can do some work to decrease borrowing and tame inflation, and there is some truth in this less conventional approach. But questions of institutional credibility are at stake. As Warsh has diverted attention from inflationary pressure on the Federal Reserve to raise interest rates, he has acquiesced to President Donald Trump’s preference for lower short-term rates. If the Fed chair is even perceived to be acting politically, markets can punish Treasuries and the dollar."}],[{"start":140.32,"text":"Other parts of the federal policy apparatus have talked of steps to keep down borrowing costs, from Bessent’s plans to double purchases of long-dated bonds to the president’s bizarre reference to military intervention in discussing the bond market. These episodes have unsurprisingly done little to reassure bond investors. Even Stanley Druckenmiller, a one-time mentor figure to both Warsh and Bessent, has argued against the outsized role that the Treasury is playing, proclaiming that “governments defending prices against fundamentals always lose”."}],[{"start":172.2,"text":"Warsh’s Jackson Hole speech could be a chance to get on a better footing with markets. Many past chairs have seized the moment to modify policy, such as Ben Bernanke’s pivotal 2010 speech announcing additional asset purchases. Warsh has repeatedly made verbal commitments to central bank independence and a 2 per cent inflation rate, but these commitments mean little without details of how they will be achieved. Hesitancy to provide more insight into his thinking has created an uncertainty premium that affects the financing of everything from home mortgages to emerging market sovereign debt. Investors will hope his speech can begin to reduce that uncertainty."}],[{"start":210.2,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1787896465_2056.mp3"}