Vosh: The Federal Reserve should gradually reduce its forward guidance

Jinshi Finance reported that on April 21, the Federal Reserve Chair nominee, Wosh, said the Federal Reserve should reduce its reliance on forward guidance and warned that excessive transparency could hinder policy flexibility when circumstances change. As he put it, “the Federal Reserve reveals to the whole world… what their forecast results will be,” but “the Federal Reserve sticks with forecasting for too long.” This phenomenon is linked to the Federal Reserve’s delayed response to the surge in inflation during the pandemic in 2021 to 2022. In his view, reducing making commitments would help achieve more flexible decision-making, because “if the Federal Reserve waits to make a decision until it holds a meeting, then this step-by-step assessment process can prevent the central bank from repeatedly making mistakes.” He considers this part of a broader reform agenda and added, “I believe these changes are very necessary, and if they are confirmed, I look forward to putting them into implementation.”