Former Federal Reserve economist Claudia Sahm warned Monday that the new Fed Chair Kevin Warsh‘s efforts to reduce public communication could leave investors relying on alternative signals to interpret the central bank’s policy direction.

“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,” Sahm said in a blog shared on X.

Warsh Scales Back Fed Guidance

The criticism follows Warsh’s first policy meeting as Fed chair, where the central bank kept interest rates unchanged and adopted a more limited approach to public communication.

During his press conference, Warsh avoided discussing the future path of interest rates, arguing that a less communicative Fed would allow policymakers to receive clearer signals from financial markets.

Warsh also declined to participate in the Fed’s Summary of Economic Projections, the closely watched “dot plot” that shows officials’ rate expectations.

Who Becomes The ‘Shadow Fed Chair’?

Sahm said investors will inevitably search for alternative signals, whether through the Fed’s dot plot, speeches from policymakers or comments from other central bank officials.

She added that the chair’s silence creates the biggest information gap for markets, as only the Fed chair is authorized to speak for the entire committee and explain its policy direction.

“So who’s the shadow Fed Chair? No one. Nothing.”

Kevin Warsh promised a quieter Fed. Last week, he delivered: a 130-word statement, no dot from the Chair, and a press conference where he wouldn't explain the decision.

So who—or what—fills the silence? A thread on the "shadow Fed Chair." 🧵 pic.twitter.com/74M6fPGfl0

— Claudia Sahm (@Claudia_Sahm) June 22, 2026

Private Signals Could Gain Importance

Sahm added that the worst-case scenario would be a greater reliance on private conversations and closed-door interactions with Fed officials.

“But if the Fed says less in public, a private word, or even a facial expression, from an official is worth more,” the economist said.

According to Sahm, the issue is not only how much the Fed communicates, but also whether investors and the public have equal access to the central bank’s thinking.

“Less public sunlight means more business done in the dark,” Sahm added.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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