Gregory Daco: Fed governor discusses limits and flexibility of forward guidance

Gregory Daco: Fed governor discusses limits and flexibility of forward guidance
Fed governor on forward guidance approach

Gregory Daco reports that Federal Reserve Governor Waller discussed the role of forward guidance in monetary policy transmission. Waller noted that while forward guidance can accelerate how policy changes impact the economy, it may also slow down transmission if it lacks flexibility. In some situations, Waller suggested, it may be preferable to avoid using forward guidance entirely. He described forward guidance as more of an art than a science.

Earlier this year, Daco reported that the Fed established five task forces to examine communications, the balance sheet, data, productivity, jobs, and inflation, amid ongoing policy developments here. Separately, Daco noted in May that China saw weaker consumer spending and investment, while exports and industrial output continued to increase here. These topics have shaped recent discussions on global monetary policy.

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