On July 29, 2026, a split FOMC meeting decided to hold interest rates steady. However, Warsh's press conference after was both confusing and concerning.
Forward guidance influences market decisions and, thus, contaminates this signal that markets send to the Federal Reserve.
Wrong rationalle for no FG. What FG can contaminate is future FEd decisions. FG or no FG market outome are influenced by what they expect the Fed to do. Look at TIPS it incorporates movement in exogenous variables AND the effects of the Fed's reaction to those variabes.
forward guidance is the practice where central banks telegraph future monetary policy decisions.
And that is what central banks shoud never ever do. They should "telegraph" what they expect the outcome of their decisions will be and why and what outcomes they are targeting.
I bever understood the fears of a hike this meeting.
Likewise.
What a clown.
Forward guidance influences market decisions and, thus, contaminates this signal that markets send to the Federal Reserve.
Wrong rationalle for no FG. What FG can contaminate is future FEd decisions. FG or no FG market outome are influenced by what they expect the Fed to do. Look at TIPS it incorporates movement in exogenous variables AND the effects of the Fed's reaction to those variabes.
forward guidance is the practice where central banks telegraph future monetary policy decisions.
And that is what central banks shoud never ever do. They should "telegraph" what they expect the outcome of their decisions will be and why and what outcomes they are targeting.