Fed Transparency Reduction Policy Shift
Reduced central bank transparency and forward guidance weakens monetary policy transmission and market guidance, particularly in emerging markets with less mature financial systems
Too little corroboration in the last 3 days to call a trend (4 articles). Watching for it to gain traction.
Mainstream financial press is carrying this — attention has broadened beyond specialist outlets.
"Since taking office, Warsh has vowed to reduce or eliminate the amount of forward guidance the Fed provides on its decision-making process, a move that has received mixed reactions. Some analysts, however, argue that opacity in decision-making creates more uncertainty for markets."
"With the changes to the policy statement, the minutes could take on even greater weight in helping investors and analysts understand the Fed's thinking — unless the FOMC under Warsh pares back how much detail about the arguments and economic data presented at the meeting is provided."
"Communication in the form of forward guidance is a powerful tool. It helps guide the markets in the direction the central bank wants. By telegraphing its next move, RBI can cause those longer-term rates to change even before the bank adjusts its own benchmark rate."
"It's the job of central banks, with their store of institutional knowledge, honed over decades-and, arguably, guised by some of the best brains-to guide markets whenever they turn irrationally exuberant. Not wait, like Greenspan, for the bubble to burst and then pick up the pieces."