Fed Chair Kevin Warsh says policy statement will no longer include forward guidance

Federal Reserve Chair Kevin Warsh said the Federal Open Market Committee will stop providing “forward guidance” under his leadership, indicating a change in how the central bank communicates its expected future interest-rate path. Warsh made the remarks Wednesday as the FOMC held its policy rate steady and issued its monetary-policy statement.

According to Warsh, the committee opted not to include forward guidance, a feature the panel has used to describe the “likely future course of monetary policy.” The statement typically describes how policymakers expect to adjust rates over time, rather than focusing only on the decision for the immediate meeting.

The announcement comes as Warsh has been positioned as the new chair of the Federal Reserve, taking on responsibility for the central bank’s leadership and policy communication approach. Warsh said the Fed would “drop” its forward-looking guidance, in language reported by The Hill.

At the Wednesday meeting, the FOMC decision to hold interest rates steady was paired with the communication change. The Fed’s policy statement, issued after FOMC deliberations, is one of the primary vehicles through which markets and the public understand how policymakers view current conditions and the committee’s next steps.

The shift also highlights how the Fed’s communications can affect financial markets and borrowing conditions, since forward guidance is often used by investors to interpret the expected timing and direction of rate moves. By removing that element, the Fed would be relying more heavily on the policy statement’s immediate decision and subsequent data and meeting-to-meeting updates.

Warsh’s comments do not, based on the reporting available for this story, specify a replacement framework for future communication, such as alternative wording or a different set of indicators. The next scheduled FOMC communications will likely provide further clarity on how the committee plans to frame future policy decisions without the forward guidance language.

The Fed’s decision is administrative in the sense that it changes the committee’s statement content, rather than altering statutory authority or changing the underlying mandate for price stability and maximum employment. However, the practical effect may be to change how quickly the central bank indicates prospective policy moves to markets and households.