The Federal Reserve's rate decision due Wednesday will be the first under new
chair Kevin Warsh. Markets will parse what Warsh says and omits for clues to
changes in Fed communication, focusing on the wording of the post-meeting
statement, any stylistic shifts and whether the post-decision press conference
will be retained. Warsh is expected to push reforms he has outlined, including
shrinking the Fed's balance sheet to refocus the central bank on monetary
policy. James Grant, editor of Grant's Interest Rate Observer, said Warsh should
confront the Fed's weakest financial positions and consider holding gold to
improve optics — the Fed currently holds no gold — and warned that if the
Treasury stopped covering Fed losses the central bank would have been insolvent,
with losses on fixed-income assets and bonds exceeding reported equity.
