Janet Yellen says she's concerned about President Trump's "attacks" on the Fed

Very carefully. A lot of work goes into that speech. It's one of the most important and carefully watched of the year. Generally, these are research conferences and often the focus is on something, you know, reasonably deep economically, something about how the economy works, an aspect of it. Perhaps Chair Warsh might talk about AI and its future impacts on the economy. I'm not sure. Could be something about how to think about the inflation process. But this is an important speech and is always carefully watched and certainly will be on Friday morning.

Well, I think it's fair for a new chair to ask some deep questions about the practice of monetary policy. He set up task forces to do that. And I think once the committee rethinks its approach, that doesn't mean that everything that has been put in place will or should be thrown out. You know, with respect to forward guidance, I think it's rarely appropriate for a central bank to make an unconditional promise about how it's going to set rates in the future. That's something that's been done only in the most extreme circumstances. We considered that, generally stopped short of unconditional forward guidance, but used forward guidance to influence market expectations. After the financial crisis, interest rates had been pinned at zero. There was really no room at the short end of the curve to influence rates. And we saw an opportunity to lower long-term rates and thought it was appropriate to do so by informing the market about our monetary policy strategy and why we thought it would be appropriate to hold short rates low for longer than market participants generally expected. And I think research shows it worked. It was helpful. Those are extreme circumstances. But look, when the market is pricing long-term bonds, the most important thing they need to figure out is what is the likely path of short-term rates. And of course, that depends on what's going to happen in the economy, how inflation and unemployment behave. And they need to bring their own expectations to that. But they do need to understand the Fed's reaction function, namely contingent on economic outcomes, how does the Fed think it's appropriate to set rates. That's not an unconditional promise, but it's explaining to the markets what the Fed's monetary policy strategy is. And I do think that's an essential element of communications to help the market appropriately price at the longer end. And also beyond that, an institution that is as important as the Fed is in determining the course of the economy has a responsibility to the American people to explain why is it making the choices it's making and how is it understanding economic developments. How does it intend to go about achieving its mandated goals of full employment and price stability? And that does require, I think, more discussion of the economy and monetary policy strategy than we've seen so far.