Blinded By the Light, a Blinding Light of 'Fed Guidance'

Is forward guidance dead? Just as Federal Reserve Chair Jerome Powell announced he and his crew would quit telegraphing future interest rate moves last month, he kept jabbering about … future interest rate moves. Other Talking Fed heads followed. This Fed flip-flop exemplifies everything wrong with forward guidance: It threatens central bank credibility while telling investors nothing useful. Members’ views change too frequently and err too often to have ever meant much. The guidance is better with no guidance.