The Fed shouldn’t give forward guidance because it doesn’t know when a change in policy will be needed
by Caroline Baum
Some commentators are pressing the Federal Reserve for more specific guidance — forward guidance, that is — at the conclusion of the two-day meeting on Wednesday.
It’s not clear why more hand-holding is needed or warranted — or even advisable.
Is there anyone on the planet who hasn’t heard that the Fed will do “whatever it takes” to support the economy and keep financial markets functioning in the wake of the Great Lockdown, now an officially designated recession, in response to the coronavirus?
Perhaps it’s not clear what Fed Chair Jerome Powell meant when he said on May 13 that the Fed “will continue to use our tools to their fullest until the crisis has passed and the economic recovery is well underway.”