Fed kicks off Warsh era by keeping rates on hold

Federal Reserve Chairman Kevin Warsh announced a new era at the Fed in his first news conference at the helm of the central bank, signaling his plan to make it quieter, with less engagement with markets and to focus squarely on tackling inflation.

Warsh spoke at his first news conference as Fed chair on Wednesday, after overseeing his first Fed policy meeting. All 12 members of the Federal Open Market Committee, or FOMC, voted unanimously to hold rates in the range of 3.5 percent to 3.75 percent for a fourth meeting in a row.

The new Fed chair was clear about his core focus. "I've said for years inflation is a choice," Warsh told reporters. "You bet it is."

He added that he was committed to bringing inflation back down to its 2 percent target. The Fed will next meet in six weeks.

In new projections, policymakers said they expected overall inflation to be 3.6 percent by the end of the year, higher than their previous estimate three months ago. Core inflation would be 3.3 percent, The New York Times reported.

In a departure from his predecessor, former Fed chair Jerome Powell, Warsh identified a series of changes he intends to make in his new role.

"The recent past need not be prologue," he said while discussing the fact that inflation was higher than the Fed's target for more than five years.

One of his first small changes was to the usual Fed statement, which he said was "a bit shorter, a bit simpler and dispenses with some older language" and focuses on "the facts as best as we can judge" them.

In another change, he declined to submit an economic forecast to the FOMC Summary of Economic Projections, including its "dot plot", CNBC reported. But he did allow his colleagues to submit one.

He also opted to end the "forward guidance", which is a hint in Fed statements about where interest rates may be heading in the future.

In his speech, he said it was important at any institution during "a change in leadership" to "reaffirm its mission, to review current practices, and to consider whether those practices best meet our objectives".

He announced that five task forces will reexamine the core functions of the central bank.

They will address communications, the balance sheet, data sources, productivity trends and jobs.

Warsh said that he will be "enlisting some of the very best minds, both inside and outside the economics profession", for discussions on the task force. They will be paired with Fed staff members.

In another departure from his predecessor, Warsh did not offer explicit guidance on interest rates or explain how the Fed will decide when to adjust rates.

Analysts said that this could make it tough for investors to determine what the central bank will do next.

He stated that the financial markets would be entering "a new chapter" with the central bank.

Warsh, 56, was nominated by President Donald Trump in January to replace former chair Powell. He took over as the 17th Fed Chair in May.