"Fed Whisperer": How Waller Explains Inflation Will Determine His Path

According to Odaily, Nick Timiraos, the Wall Street Journal reporter known as the "Fed whisperer," analyzes in his latest article that Fed Chair Kevin Warsh's first major speech at Jackson Hole this week will face a core question: whether persistently high U.S. inflation is caused by one-off shocks like tariffs and wars, or whether the economy itself remains overheated.

This judgment will directly determine the direction of interest rates, and it is also the biggest disagreement within the Federal Reserve currently. At the July meeting, three officials supported a rate hike, and other officials have also signaled the possibility of further tightening, while Warsh has yet to take a clear stance. Since taking office, he has deliberately reduced policy guidance, and now both the market and his Fed colleagues are waiting for his first systematic explanation of his views.

The key to Warsh's tenure ultimately depends on how he explains why previous policies failed to bring inflation back to 2%. If the rate cuts and pro-employment policies of the past two years were themselves mistakes, because the labor market was actually stronger than the Fed had judged, then Warsh would need to push for reversing the rate cuts. However, this would conflict with the stance previously taken by Trump and Bessent, who had called for further rate cuts.