Silence isn’t golden for a world looking to Kevin Warsh’s Fed

Since being sworn in as US Federal Reserve chairman on May 22, Kevin Warsh has struck a distinctly hawkish tone. At his first press conference at the helm of the world’s most important central bank on June 17, Warsh made a solemn vow to curb inflation. He said members of the Fed’s interest rate-setting committee were “unambiguous and unanimous. This committee will deliver price stability”.Bond investors who questioned Warsh’s inflation-fighting credibility – given that he built his candidacy for Fed chair on lower interest rates to persuade US President Donald Trump to nominate him for the role – are less concerned that he will yield to pressure from the White House to lower borrowing costs despite elevated inflation.Since the conclusion of the Fed’s policy meeting on June 17, the yield on the interest rate-sensitive two-year Treasury bond has risen from 4 per cent to 4.15 per cent. Bond markets are pricing in at least one interest rate increase by the end of this year.