Fed's Warsh says forward guidance prudent during crises, not in benign moments
TLT•Warsh on how central bankers react to economic conditions
Warsh added that central bankers are naturally inclined to tighten policy when they see stable employment and underlying inflation moving higher.
Warsh says forward guidance fits crises more than calm periods
Federal Reserve Chairman Kevin Warsh said on Wednesday that more forward guidance on monetary policy decisions may be prudent in moments of financial crisis, such as the 2008-2009 period, but it's worth revisiting such guidance during more benign periods.
“Well, in crisis mode, that strikes me as a very prudent policy. But in more benign conditions, it strikes me as worth revisiting,” Warsh told a news conference after Fed policymakers held rates steady. “But markets and market participants and reporters have learned to devour all that information. So I take seriously that the pullback of forward guidance requires some transition.”
