Honeymoons Over: Warsh Under Pressure as Fed Weighs Raising Rates

Three years before taking over as chairman of the Federal Reserve, Kevin M.Warsh recounted an exchange he once had with a hero of his, Paul A.

Volcker, the celebrated central banker.Mr.Volcker, who navigated the Fed through one of the worst bouts of inflation in the 1970s and 1980s, told Mr.

Warsh, then a governor, that the central bank’s job boiled down to two primary responsibilities.The first was getting interest rates “about right.” The second was to “make sure you look like you know what you’re doing.”Those duties are top of mind as Mr.

Warsh prepares for his first address as chairman to the world’s leading economic policymakers in Jackson, Wyo.His speech, scheduled for Friday at 10 a.m.

Eastern, is the biggest draw of the three-day conference hosted by the Federal Reserve Bank of Kansas City.It will offer Mr.Warsh the most powerful perch yet to articulate his own framework for thinking about the economy, the policy choices in front of the Fed as it contends with elevated inflation and how he is assessing seismic changes — such as new sources of productivity gains from artificial intelligence — that could alter the country’s growth prospects in the years ahead.Those details have been intentionally sparse, reflecting Mr.

Warsh’s inclination to guard his preferences.One of the only things that Mr.

Warsh has made unequivocally clear is that he is committed to getting inflation down after five years of the central bank’s overshooting its 2 percent target.And even then, he has spoken only obliquely about the possibility of raising rates to get there.The lack of specifics on where Mr.

Warsh stands on a number of fundamental issues has caused confusion both inside and outside the Fed, overshadowing his broader ambitions to enact sweeping change at the institution.Resolving this does not require Mr.

Warsh to provide specific guidance about the Fed’s policy moves in September and beyond, as he is staunchly opposed to doing.But a slight...