Warsh intends to provide less specific forward guidance than his predecessor Jay Powell did.
“There's a classic mismatch between the concreteness, I'll call it, that the markets are constantly craving. I think it's the case that Kevin Warsh wants to be a little less open than, say, [former Fed Chair] Jay Powell.”
Warsh suggests that reducing forward guidance may have contributed to prices responding more quickly to incoming data.
“Prices reacted in real time to incoming information, and the reduction in forward guidance may have been a factor,”
Warsh says 2021 forward guidance may have delayed the Fed's response to high inflation.
“I am not alone in noticing that forward guidance in 2021, to cite just one example, might well have slowed the policy response to high inflation.”
Warsh says Fed forward guidance in 2021 likely slowed the policy response to high inflation.
“I am not alone in noticing that forward guidance in 2021, to cite just one example, might well have slowed the policy response to high inflation.”