JACKSON HOLE, Wyo. — Federal Reserve Chair Kevin Warsh has delivered what the financial world is now describing, with unusual unanimity, as a speech in which he said almost nothing, and in doing so, said everything. At the Jackson Hole economic symposium, Warsh warned that inflation was “too high,” suggested the bank might have “work to do,” and then, with a discipline his predecessors never possessed, declined to say what the work was, when it would happen, or even what kind of work, at all.

The markets responded the way markets do when they are given a riddle instead of a forecast: by guessing. Investors moved the odds of a quarter-point rate increase at the September meeting to almost 60%, up from about 35% the day before. A hike, it now appears, is less a policy and more a vibe.

Warsh has long been a critic of “forward guidance,” the Fed practice of telling the public what it is about to do so the public can, in theory, plan. He described the new approach as an “outline” rather than a predetermined course, and a “quieter” central bank that would let the economy reveal itself instead of being told, in advance, what it is allowed to be. Analysts have used a number of terms for the strategy, including, and this is not a joke, “backed himself into a corner.”

"We are not going to tell you what we are going to do. We are going to do it, and then, in the spirit of transparency, we will explain it at a later date."

The genius of the approach, as its supporters are quick to note, is that it is impossible to be wrong. If rates go up, the Fed was right to hint at a hike. If rates stay put, the Fed was right not to commit. If the economy blows up, the Fed will have been, in every relevant sense, quiet. The strategy has been compared, favorably, to a hedge fund and, less favorably, to a phone that will not stop vibrating.

THE QUIET, AT A GLANCE

  • Inflation “too high,” per the chair, without a target being named for it to be high relative to
  • “Work to do,” per the chair, without a task force, a timeline, or a job description
  • Forward guidance, per the chair, “not really our thing,” a phrase that has since appeared on a t-shirt
  • September rate-hike odds, per the market, 60%, up from 35%, a 25-point swing on the strength of a shrug
  • A “quieter” Fed, per the chair, which is to say a Fed that will, when asked, say “I can't comment” more loudly

The speech was well received by those who prefer their monetary policy the way they prefer their coffee: hot, and without a label. It was less well received by those who preferred to know, in advance, whether their mortgage would change, a demographic that includes, at this writing, most of the country.

At press time, Warsh had been asked, on the red carpet, whether he would consider giving even a single number, and he had smiled, and the market, which has learned to read the smile, had done what it does, which is to make up a number and bet on it.