Too early to judge Fed Chairman Kevin Warsh's communication style, billionaire investor David Rubenstein says

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Fed Chairman Kevin Warsh may soon realize that giving less information to the markets on his thinking about interest rate policy — as he has been inclined to do — may not be the best course of action.

His legacy as Fed chair may ultimately be defined by whether he learns to adjust his communication with investors.

"I don't want to say what [Warsh will] have to do, but I would say that the market obviously likes more information," Carlyle ( CG ) co-founder and Warsh's friend David Rubenstein said in a new episode of the Power Players with Brian Sozzi podcast (see video above or listen below). "And so he may be able to do what he wants to do in time; it's too early to say. But he's a very smart, talented person, and I think the president picked a good person."

Few doubt Warsh's intelligence, but they are beginning to question what his leadership will mean for markets going forward. So far, it has been a somewhat rocky start leading the world's most powerful central bank.

During his debut keynote address as Fed chair at the Jackson Hole Economic Policy Symposium a couple of weeks ago, Warsh adopted a hawkish stance on interest rate policy, warning that the central bank's fight against inflation is far from over.

With inflation "running above our 2% target … the Fed's predominant focus right now should be on prices," Warsh said.

Warsh characterized recent inflation numbers as "concerning" and added that "we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed … otherwise, we have work to do."

Investors were hoping Warsh might hint at an upcoming interest rate cut or a softer stance on inflation. No luck.

Instead, his adamant focus on maintaining the 2% inflation target — paired with remarks implying financial conditions may not yet be restrictive enough — pushed Treasury yields higher.

Traders have moved to price in a nearly 90% probability of an interest rate hike at the Fed's meeting this week — a probability boosted by a hot Consumer Price Index reading last week.

Goldman Sachs economists said in a new note that they expect the Fed to raise interest rates by 25 basis points this week.

"I think markets are still going to try to figure out what the Fed is thinking, but they'll have less information, less of a basis on which to do that," Goldman Sachs chief economist Jan Hatzius told Yahoo Finance at the firm's Communacopia & Tech conference.