Federal Reserve Chairman Kevin Warsh made his first appearance on the global stage, arguing that central banks should stop trying to predict the economy. Warsh’s comments were made during a panel hosted by the European Central Bank in Sintra, Portugal, where he found common cause with other top central bankers who also question the practice of speculating about the economy’s future path.

Forward Guidance Under Scrutiny

In central banking, ‘forward guidance’ refers to the practice of policymakers signaling where interest rates may be headed in the spirit of transparency. However, Warsh has noted that this practice is less useful in times of high uncertainty, when no one truly knows what will happen. The US economy is currently trying to move past the economic disruption of the conflict in the Middle East, which has pushed US inflation to a three-year high.

Warsh’s latest comments come as the Fed considers hiking interest rates for the first time since 2023 to cool the economy. In their latest economic projections, nearly all Fed officials penciled in either a rate hike this year or holding borrowing costs steady. Warsh has emphasized the importance of getting inflation back down to the Fed’s 2% target and announced five task forces to review factors affecting the Fed’s monetary policymaking, including productivity.

Original reporting: El Paso News (HLL/CB) — read the source article.