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Jackson Hole — shorthand for the annual meeting of global central bankers and other economic thinkers — is one of the most important economic events of the year.

“Traditionally, the Fed chair uses the Jackson Hole speech to deliver a particularly important and long-range message,” Axios’ Neil Irwin explains.

This year was Kevin Warsh’s first as chair — and he used his closely watched keynote speech to:

To understand the message behind his words, Macro Talk tapped Navy Federal Credit Union chief economist Heather Long to decode the speech. (Hint: Rates are almost certainly going up.)

Below is our email Q&A, lightly edited for clarity.

Macro Talk: Why does Jackson Hole matter?

Heather Long: Any time a Fed chair speaks, it matters. But Jackson Hole was a test for new Fed Chair Kevin Warsh. He's only been in the job 100 days, and Wall Street still doesn't understand him. Warsh needed to provide more clarity on how he sees the economy and interest rates. He did that.

What was the biggest surprise from the speech?

Warsh started his speech by talking about hikes — literal ones. He also surprised me by saying explicitly that the better-than-expected CPI and PCE readings this summer "do not tell me that underlying trends have meaningfully improved." That was hawkish and different from his remarks earlier this summer.

This year’s theme was innovation. Why does "the conduct of policy at the Fed" need "innovation"?

Fed Chair Kevin Warsh believes his No. 1 mission is to bring the U.S. central bank into the A.I. age. His five task forces are all about making the central bank communicate differently, consider a wider array of real-time data, and better assess the game-changing impact of A.I.

Why did he tackle A.I. in his speech first?

Warsh is the A.I. Fed Chair. He talks about it constantly, and he clearly believes A.I. will upend most of what we thought we knew about the economy and its potential.

He called this a "hinge point in history" and spelled out his belief that this will cause higher growth and productivity.

What felt new in this speech is how many questions he thinks are still unanswered, especially about A.I.'s impacts on the labor market, the price of tokens, and what all this means for markets. Basically, he was a lot more humble in this speech about all we don't know about A.I.

This part of the speech seemed telling: "With so much changing so fast in geopolitics, global supply chains, and technology, it's wise to be modest about what we can and cannot know." If markets and business leaders are looking for certainty, this sounds like the Fed is saying "even we don't know" more than ever.

What Kevin Warsh was really saying about uncertainty is that he believes the Fed needs better models and a wider range of data. While nothing will ever give the full picture, he thinks the Fed can do a lot better than it currently is doing. Warsh also clearly does not like responding to the daily headlines — or even one or two data points — and wants to stop the Fed from reacting so often.

"Trends matter most." That phrasing stuck out to me. Trends are Macro Talk’s beat. Was this significant?

Kevin Warsh won't be making his September or October or December rate hike calls based on one or two data points. That's a big departure from Powell and Yellen.

What should the average consumer or worker take away from the speech?

The main takeaway is that interest rates are almost certainly going up. The question is when. September or December? Warsh didn't commit to September, but he seems to be leaning toward a hike.

What should business leaders take away?

The main takeaway for business leaders is that Fed Chair Warsh does listen to markets. Wall Street wanted him to say more about his views on inflation and what data he watches, and he did that. He is responsive.

Warsh is also extremely interested in how quickly A.I. will impact productivity. He put business leaders on his task forces. He clearly wants to hear more from the business community to assess A.I.'s impacts on the economy.

Why does the Fed need "market signals"?

At the end of the day, borrowing costs are mostly determined by the bond market. The Fed has some influence on the bond market, but there are a lot of other influences. Fed Chair Warsh wants to see what markets really think about the health of the economy.