Kevin Warsh, the newly appointed chair of the Federal Reserve, sought to ease investor concerns in his first major speech at the central bank’s annual symposium in Jackson Hole, Wyoming, on Friday. His remarks, delivered before an audience of global central bankers and market participants, came amid heightened market volatility and diverging signals from U.S. economic policymakers.

Warsh’s speech was closely watched following a turbulent period marked by rising U.S. borrowing costs reaching multi-decade highs and apparent discord between the Federal Reserve and the Treasury Department. Since taking office, Warsh has faced criticism for his sparse communication style, which some investors said left markets uncertain about the Fed’s direction.

Addressing these concerns, Warsh emphasized the Federal Reserve’s continued commitment to reducing inflation, which has exceeded the central bank’s 2% target for more than five years. He reaffirmed the 2% inflation goal as the Fed’s “predominant focus” and acknowledged that the central bank would need to take additional measures if inflation fails to decline soon.

Warsh also provided insight on the current economic environment, stating that financial conditions could not yet be described as restrictive enough to tame inflation. The Federal Open Market Committee is scheduled to meet in two weeks, and market expectations for an interest rate increase rose sharply following his speech. However, Warsh declined to offer explicit forward guidance, reiterating his preference for preserving policy flexibility amid evolving economic developments.

The speech appeared to include a subtle critique of Treasury Secretary Scott Bessent’s recent interventions in financial markets. Warsh highlighted the importance of “clear market signals, as unfiltered as possible,” underscoring his long-standing view that government interference can distort market pricing and potentially complicate monetary policy. This stands in contrast to Bessent’s recent efforts to suppress rising long-term Treasury yields, including augmented purchases of government bonds and measures to support the Japanese yen. The Treasury secretary has argued that high bond yields do not reflect underlying economic fundamentals.

These differing approaches have exposed a notable rift between the top U.S. economic officials. While Warsh advocates allowing market forces to impose tighter financial conditions that may restrain economic activity and curb inflation, Bessent is deploying what he describes as a “big toolkit” to ease borrowing costs ahead of the November midterm elections.

Despite the policy divergence, Warsh’s address was generally well received by economists and market analysts. Michael Pearce, chief U.S. economist at Oxford Economics, said the speech provided “more clarity” and boosted Warsh’s credibility without locking him into a specific course of action. Thomas Ryan, senior North America economist at Capital Economics, described the address as “flawless” and viewed Warsh’s hawkish tone as a corrective to perceptions of indecision following his July press conference.

Warsh’s remarks have temporarily quelled criticism, but scrutiny will intensify at the Federal Reserve’s next policy meeting, where markets will weigh both his words and forthcoming decisions regarding interest rates.