Kevin Warsh and the Magical Delete Button

There is a new sheriff in town, and he is shaking things up! Yes, Kevin Warsh chaired his inaugural Fed meeting today, giving investors a first look at his style. To us, this is more significant than what his arrival means for monetary policy, which is always set by committee and tends to follow markets more than it steers them. Indeed, policymakers’ unanimous decision to hold rates was widely expected and a bit of a snooze. But communication is changing, and some headlines warn it is trouble. We doubt it. We think the dawn of the Warsh era looks like a benign return to an old-school Fed.

As we covered at the time, little of substance emerged from Warsh’s confirmation hearings, where he mostly spouted generalizations, benign obfuscation and some attempts at humor. But one thing did catch our eye: his observations that the Fed says a lot more than it used to, and this might not be a net benefit. He has also occasionally criticized frequent Fed press conferences and the “dot plot” of policymakers’ fed-funds target rate forecasts, musing we might be better off without the circus. So as we headed into his first meeting this week, we saw a lot of articles warning he might cut Fed output and that this could be quite bad, reducing transparency and raising the risk of a policy surprise.

For once, a new Fed head proved predictable. Warsh’s first policy statement contained a measly 130 words, less than half of April’s statement (341) and the lowest since Alan Greenspan’s efficient 128 words in January 2002.^[i] And way, way, waaaaaaaaaaaay lower than the peak 895 words in September 2014.

Far be it from us to compliment a central banker on something other than their choice of smart-casual attire at Jackson Hole, but the new statement is a beautiful exemplar of efficiency. Where Powell (like prior Fed heads) listed every Federal Open Market Committee member’s vote—even when it was unanimous—Warsh just called it “a 12 – 0 vote” and figured people would know who voted for what. Hear, hear—if something goes without saying, you needn’t say it. He also axed the bit about the Fed’s decision being “in support of its goals,” which, duh. Forward guidance is in the rubbish bin, too. The economic update was 44 words, matching April’s count, but it packed more meat. Observe:

April: “Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, on average, and the unemployment rate has been little changed in recent months. Inflation is elevated, in part reflecting the recent increase in global energy prices.”^[ii]

June: “Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”^[iii]

And where Powell’s last statement noted the FOMC is “strongly committed to supporting maximum employment and returning inflation to its 2 percent objective,” Warsh’s offered a blunt “The Committee will deliver price stability.”^[iv] Which is bold and may come back to bite them, but we applaud the concision.

The Fed did still release its dot plot, but eagle-eyed readers noticed there were only 18 dots instead of 19. In his post-meeting presser, Warsh confirmed he didn’t participate but stressed he encouraged everyone else to log their forecasts. Perhaps this will be a precursor to the dot plot’s demise, but we aren’t there yet.

If the dot plot goes, we reckon it would be a net good. It is fun in a “what shape does that cloud look like” kind of way, but it doesn’t predict monetary policy. Fed folk frequently violated their own forecasts, which showed flexibility (good) but risked their credibility (bad). It often gave the impression of saying one thing and doing another. (So don’t read into all the new rate hike projections in the latest one.)

Same goes for the old FOMC statements’ forward guidance section. When former Fed head Ben Bernanke adopted forward guidance, he thought it would reduce the risk of Fed surprises and associated market volatility. People still seem to buy that thesis. But it did the opposite. Forward guidance about tapering the Fed’s quantitative easing (QE) program in May 2013 caused a sharp selloff, widely dubbed markets’ “taper tantrum,” and he backed off. He and his successor, Janet Yellen, used forward guidance to set criteria for hiking rates and shrinking the Fed’s balance sheet. Both ended up backpedaling. Powell used that space to call inflation transitory and downplay rate hike risks in 2021 and early 2022, rendering mid-2022’s steep rate hikes a shock.

We have long spotted an interesting trend about the Fed’s policy statements: Their length ballooned with the Fed’s balance sheet. Consider Exhibit 1. Throughout the early and mid 2000s, statements were short. But they got longer as monetary policy grew more complex, which makes sense. When you have an alphabet soup of policy programs, you publish alphabet soup to explain and update them all.

Exhibit 1: Alphabet Soup, Two Ways

Source: Federal Reserve and FactSet, as of 6/17/2026. Total Federal Reserve Assets Excluding Eliminations From Consolidation and Fed meeting policy statement word count, January 2002 – June 2026.

Bloated word count struck us as a side effect of bloated programs that didn’t appear to be stoking growth as intended. For instance, the fat balance sheet erupted from QE, which flattened the yield curve and discouraged lending. The Fed thought lowering long rates would juice loan demand. Instead, it shrank the gap between short- and long-term interest rates, making life hard for loan officers. Banks borrow at short rates and lend at long rates, making the spread a measure of profits on new loans. When QE shrank that spread, it discouraged risk taking, reducing loan supply. We think this is a big reason GDP growth in the 2010s was rather meh.

But now QE is over. Monetary policy is pretty normal, and now word count is, too. Stocks should be fine with this. Volatility wasn’t low during the bloated-statement era. The S&P 500 endured several corrections (sharp, sentiment-induced drops of -10% to -20%) and two bear markets (not including 2007 – 2009) then. And when Greenspan was boring everyone with short statements saying nothing, markets handled it fine, with bull and bear markets. What matters most is credibility. If the Fed earns more of it with fewer words, that probably does more for market confidence than transparency ever did.