Will the Shadow Fed Chair Please Stand Up?

Kevin Warsh may want a quieter Fed, but markets will fill the silence, just less reliably and at a high cost.

Credit: Chip Somodevilla / Staff. June 17, 2026, FOMC Meeting.

Last week, Kevin Warsh did his best to stay behind the curtain and deliver on his promise of a quieter Fed. The FOMC statement was cut by more than half, to 130 words; Warsh did not participate in the Summary of Economic Projections, which includes the dot plot, and at the press conference, he refused to elaborate on monetary policy or inflation beyond what was in the statement. Warsh defended his guarded stance on information grounds. Market prices, he argued, are the most important signal the Fed has, but when markets are only "reflecting back what we've said," the Fed loses that signal, he claims. Quieter Fed communication, in his telling, lets the Fed hear a louder market signal. Warsh is flipping the direction of information from “forward guidance,” in which the Fed offers insights on future policy to affect markets today. The best way to exchange information with financial markets is debatable, but that exchange is only one aspect of Fed communication. Accountability and transparency to the public are, too. Even if we focus on the first channel, markets can’t make Warsh talk, but Warsh can’t make them ignore the Fed either. So, who or what will fill in the blanks?

The dot plot.

The short FOMC statement ended with a forceful commitment: “The Committee will deliver price stability.” The next natural question is, what’s the Fed’s plan to deliver on price stability? Warsh was determined not to discuss the path ahead, so the dot plot filled the gap, a dot plot that Warsh did not participate in. The dot plot drawn anonymously from the eighteen other Fed officials is the first candidate for the shadow Fed Chair.

As I predicted in last week’s post, the dot plot showed Fed officials deeply divided over the best course of action for monetary policy this year. Nine officials said it would likely be appropriate to raise rates, eight favored holding rates, and only one favored a cut. Yet the committee voted unanimously to hold rates steady — unanimous on its current decision, deeply divided on where rates should go from here. The dot plot, with no help from Warsh, signaled a dramatic shift: many more Fed officials now see appreciably higher rates as appropriate than did in March, reflecting an inflation outlook that has worsened in recent months. Their previous dots were from the initial weeks of the conflict in the Middle East, and a lot has changed since then.

Financial markets reacted to the hawkish dot plot, pushing market rates higher. Even so, the dots are a poor shadow Fed Chair. Start with the obvious: the June median is not the FOMC's median; it's the FOMC median minus the Chair. That’s a big minus March's dot plot didn't have. And even a complete plot would be a thin proxy. It's an individual exercise done in preparation for the meeting, not a read on where the committee landed after it. And the committee updates it only every other meeting, so it offers nothing at all in July.

Other Fed officials.

Since Warsh won’t talk, the search will be on for a Fed official willing to speak and seeming to embody the committee’s consensus. I am not fond of this exercise. I would much prefer Warsh, as the actual Chair, lay out the committee’s thinking himself, but that’s his choice, not mine.

Warsh cannot force other Fed officials to stop talking. Out of deference to the new Chair, I expect fewer explicit discussions of future policy. But most will still explain why they voted as they did and how they think about the path ahead. That would be a lot more than Warsh appears willing to do.

The search for a shadow Fed Chair starts this week. Fed Governor Chris Waller, who was on the short list for Fed Chair, speaks Monday morning at a conference on the dollar. New York Fed President John Williams and Chicago Fed President Austan Goolsbee speak later in the week. Reading the Fed will now mean listening to every official and stitching their comments together over time, a noisier and less precise process than we are used to with recent Fed Chairs. Critically, Fed officials are only allowed to speak for themselves and cannot reveal the committee's conversations. The Fed Chair is the only one authorized to speak for the FOMC, and Warsh is choosing not to. No other Fed official will speak for the Chair. The Chair is the missing piece. He sets the agenda for the meetings, so his silence is the hardest gap to fill in reading where the committee lands.

Other Fed officials treated as the shadow Fed Chair might fill in some of the blanks, but as Powell said in his last press conference, "There is only ever one Chair of the Federal Reserve Board." That one Chair is now Warsh, and he is the one staying silent. We might identify a stand-in, but he or she will be an imperfect substitute for the only person authorized to speak for the committee.

Shadows.

The worst possible outcome is that the shadow Fed Chair is the shadows. Private exchanges are not new at the Fed, and the line between proper and improper has always been hard to draw. But when the Fed says much less in public, that scarcity makes any private word with an official far more valuable, and the gray area more dangerous. If Warsh is serious about cutting back the Fed's public communication, he will have to be even more aggressive about reining in its private communication.

Over the weekend, the Wall Street Journal reported that Michelle Bowman, the Fed's Vice Chair for Supervision, spoke at an invite-only private dinner hosted by Bank of America for clients just hours after Warsh's press conference. Bowman said the reporting "unfairly characterizes" the event and that she followed the Fed's ethics rules. She may well have. But if the Fed says less in public, a private word, or even a facial expression, from an official is worth more. So the Fed's ethics rules on private communication will need to be tightened to match Warsh's vision for a quieter Fed.

The pursuit of prestige and profit through private access to Fed officials is not new. Years ago, interviewing for a financial-sector job, I was asked whether I could get current Fed officials to appear at the firm's private events. I said no, and that I did not think anyone could, given the ethics rules. It cost me the offer, and losing it taught me how much private access is worth. I was also wrong that no one could. These arrangements turned out to be more common than I assumed, which is why Bowman's dinner did not surprise me. It is not the first to draw scrutiny in recent years, and it won't be the last. The stakes for private gain will ratchet up enormously if the Fed under Warsh pulls back on its public communication. Less public sunlight means more business done in the dark.

In closing.

So who, or what, will be the shadow Fed Chair? The honest answer is no one, and nothing. The dots, the other officials, even the private events can fill in some missing information, but each is a noisier, less reliable substitute, and none can do the one thing only the Fed Chair can: speak for the committee and answer for its decisions. That gap comes at a price. A muddier signal raises the odds that the Fed will surprise markets and that adds to borrowing costs. And it leaves the public with a looser claim on an institution that owes it both accountability and transparency. One of Warsh's five new task forces is on communication. Forward guidance is too narrow a lens. It should also ask what the public deserves to know about the Fed's thinking, and how the Fed keeps access to that thinking from becoming a private privilege.

Bonus Links (recorded last Thursday after the FOMC meeting):

• On Bloomberg TV, I argued that, whatever one thinks of skipping the dot plot, Warsh should at least have explained the Fed's decision to hold. Accountability starts there. (Video on X).

• I joined Randy Quarles, a former Vice Chair for Supervision, and Mark Sobel, the Chairman of the Official Monetary and Financial Institutions Forum, for an OMFIF webinar. It’s a good sampling of differing viewpoints on the Warsh Fed.

• Finally, I was on the Moody’s Inside Economics podcast with Mark Zandi, Marisa DiNatale, and Cristian deRitis. We talked about many aspects of the Warsh Fed. Mark even made a prescient observation that private communications could be a problem for a Fed that talks less in public.