A review of the U.S. Federal Reserve's monetary policy framework could increase financial market volatility by reducing policy predictability and central bank intervention, though the Fed's commitment to price stability will remain intact. On June 17, during his first press conference as Fed chair, Kevin Warsh announced he was launching a sweeping review of the central bank's monetary policy, including its inflation framework, balance sheet policies, and data and research methodologies. The review will also reexamine how the Federal Open Market Committee (FOMC) communicates its decisions to the public. Finally, a new "Productivity, Labor, & AI Task Force" will assess the supply-side impact of AI on productivity, labor demand, and long-term inflation and interest rates. ...
