Fed Transparency Under Question?
Christopher Waller, a member of the Federal Reserve Board of Governors, challenged Fed Chairman Kevin Warsh's stance on moving away from communicating the expected direction of future monetary policy to markets.
During a conference organized by the Bank of Italy in Rome, Waller stated that properly applied guidance, known as forward guidance, regarding future central bank decisions remains an important tool supporting the effectiveness of monetary policy.
He said, however, that Fed officials sometimes approached the use of forward guidance in an inappropriate way, limiting their scope of action.
According to Bloomberg, the banker "used the example of signals sent by the central bank in 2020 and 2021 that interest rates would remain unchanged for some time, despite a sharp rise in inflation,"
"I still believe that forward guidance can be a valuable tool that sometimes greatly strengthens the monetary policy-making process and will remain useful," Waller said.
"These guidelines are more art than science and there were situations where they tended to hinder rather than facilitate policy formulation," he added.
Waller considered the question of the pace of achieving the Fed's 2% inflation target at the pace Warsh announced to be "disputed".
He also added that Warsh likely reaffirmed the Fed's commitment to achieving this goal, rather than re-committing to it.
The official also noted that the U.S. labor market shows signs of stabilization, allowing policymakers to focus on inflation.
According to forecasts, half of the 18 officials expect at least one rate hike this year.
Waller declined to share his predictions.
The Federal Reserve last month decided to keep rates unchanged.
The Fed's federal funds rate remains in the range 3,5-3,75%.
Source: Trading Economics.
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Dollar to zloty on Tuesday, July 7
The dollar to zloty on Tuesday, July 7 is at 3,75 PLN.
Chart. Dollar to zloty (USD/PLN)
Source: Trading Economics.
The euro to dollar rate reaches 1,14 USD.
Chart. Euro to dollar (EUR/USD)
Source: Trading Economics.
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Source: Bloomberg.
