Washington —
Federal Reserve Chairman Kevin Warsh isn’t alone in arguing that central banks should stop trying to predict the economy: A slew of top central bankers said Wednesday they also question the practice of speculating about the economy’s future path.
“We have found common cause,” Warsh said Wednesday during a panel hosted by the European Central Bank in Sintra, Portugal. That was in response to ECB President Christine Lagarde, who said: “I have one regret, it’s to have felt bound and compelled by forward guidance.”
Bank of England Governor Andrew Bailey and Bank of Canada Governor Tiff Macklem also said they oppose the practice.
In central banking, “forward guidance” is when policymakers signal where interest rates may be headed in the spirit of transparency. But as Warsh has noted, that’s less useful in times of high uncertainty, when no one truly knows what will happen.
