Paul Krugman critiques Kevin Warsh’s conventional remarks at Jackson Hole

Kevin Warsh took the stage at Jackson Hole on August 28 with the weight of expectation on his shoulders. The new Federal Reserve Chair, who assumed the role in May 2026, had signaled a departure from the communication-heavy, forward-guidance-obsessed Fed of the past decade. What he delivered instead, according to economist Paul Krugman, was something “utterly conventional.” The speech that moved markets but not paradigms Warsh’s keynote doubled down on the Fed’s commitment to its 2% Personal Consumption Expenditures inflation target. Recent inflation readings have landed between 3.3% and 3.7%. The chair acknowledged the gap between where inflation sits and where it needs to be. He signaled that if underlying inflation trends didn’t improve, the Fed would need to act. Markets took the hint. The 2-year Treasury yield jumped about 9 basis points after the address. The probability of a September rate hike climbed to roughly 50-60%, according to market pricing. Warsh also emphasized what he’s called a “quieter Fed” approach, one focused on real-time economic data rather than detailed forward guidance about where rates might head months or years from now. Krugman noted this looked a lot ...