Federal Reserve task forces to reveal staffing as Warsh broadens adviser search

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Fed task force staffing

Highlights

Warsh will reveal some task force members next week after launching five panels post-June 16-17 FOMC meeting to review key Fed practices.
The review will include international economists and aims to bring new perspectives, with former Bank of England Governor Mervyn King reported to lead one panel.
Task forces will serve as advisory bodies, and any policy recommendations require broader Fed leadership approval before implementation.

Task force appointments and review scope

As reported by Reuters, Warsh says some of the outside experts serving on the task forces will likely be identified next week after he launched the panels following the June 16-17 Federal Open Market Committee meeting.

Speaking at a European Central Bank forum in Sintra, Portugal, Warsh says the Fed is trying to recruit leading economists, including people from countries outside the U.S. He says the aim is to bring in fresh perspectives rather than prejudge the outcome of the reviews.

At that June press conference, Warsh announced five task forces to examine Fed communications, the central bank balance sheet, how the Fed uses economic data, productivity and jobs, and the inflation framework. Bloomberg reported on Wednesday that former Bank of England Governor Mervyn King would lead one of the panels, although Warsh does not name any members at the event.

Policy implications for the Fed

Warsh, who is confirmed to lead the Fed in May, has made criticism of the central bank's recent conduct a central part of his push for change. He has repeatedly challenged how the Fed operates, explains its decisions and uses its balance sheet, and since taking office he has avoided offering guidance on the monetary policy outlook.

The task forces are expected to function as advisory panels rather than decision-making bodies. Any recommendations would still require support from the rest of the Fed leadership before they could be turned into policy changes.

Warsh also says the lessons from the review may extend beyond the Fed and could be relevant for other central bankers, referencing fellow policymakers from the ECB, Bank of England and Bank of Canada on stage in Sintra. The use of foreign advisers also echoes Warsh's own earlier work with the Bank of England, where he advised on monetary policy issues.

Our earlier article on Bank of England policy at the Sintra forum highlighted Governor Andrew Bailey’s message that rate cuts remain off the table this year despite softer growth and a pullback in oil prices. The piece emphasized how uncertainty around the path of energy costs is keeping policymakers cautious and shaping market expectations for only limited further tightening.

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