Federal Reserve Governor Waller: If necessary, the use of forward guidance can be abandoned to maintain policy flexibility.
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Federal Reserve Bank of Walter offered two key considerations for monetary policy: initial conditions and forward guidance determine the transmission effect.
According to Odaily Odaily, Federal Reserve Bank of Walter Waller offered two points of consideration regarding the monetary policy transmission mechanism, emphasizing that policy effectiveness depends on initial conditions and the way forward guidance is used: First, "initial conditions are crucial," meaning monetary policy assessments should be based on current economic conditions, not historical averages. Second, regarding the role of forward guidance, he believes that while forward guidance can accelerate policy transmission in certain situations by influencing market expectations and changing financial conditions in advance, if it is too rigid or lacks flexibility, it may weaken policy effectiveness or even delay necessary policy adjustments. Waller emphasized that when multiple economic scenarios exist, the “average path” cannot be simply used as a basis for policy guidance, and policymaking needs to maintain adaptability and flexibility to different scenarios.
Bitunix analysts: The Federal Reserve has downplayed policy guidance, with "uncertainty premium" becoming the main battleground, rather than the interest rate path.
According to BlockBeats, on July 7th, the focus of global markets is gradually shifting from interest rate direction to policy communication methods. Federal Reserve Governor Waller stated that forward guidance should not be a fixed framework and could even be completely eliminated if necessary, reiterating that the central bank will not deliberately maintain low interest rates to address government fiscal deficits. This means that the market will rely more on real-time economic data rather than pre-determined interest rate paths from central banks, reducing policy predictability. It also means that asset prices will become increasingly sensitive to inflation, employment, and economic data, and market volatility may refocus during periods of major data releases. On the other hand, Middle East risks have escalated again. Reports of missile attacks on merchant ships in the Strait of Hormuz have surfaced again, threatening to shatter the previously established window of easing tensions between the US and Iran. Trump reiterated that he would not rule out escalating military action if negotiations fail. However, Saudi Arabia lowered its official selling price for crude oil to the Asian market in August, reflecting relatively ample supply. The energy market is currently still oscillating between "geopolitical risks" and "supply easing," and whether oil prices can rebound in the short term depends on whether the conflict further impacts actual supply. On the other hand, the issues of Japanese debt pressure and the continued weakening of the yen have resurfaced, and market doubts about the Bank of Japan's policy space have not subsided. The trend of global capital flowing into high-yield dollar assets has not changed significantly. For the crypto market, what truly deserves attention is not a single event, but the loss of the "certainty" provided by central bank forward guidance. As policy begins to rely entirely on data, geopolitical risks escalate, and global liquidity remains tight, the crypto market will continue to be primarily driven by changes in risk appetite and liquidity momentum in the short term. Price movements will continue to be repeatedly disrupted by macroeconomic events and market sentiment. Until capital flows truly form a unified direction, a cautious stance is expected to persist.
Federal Reserve Governor Waller: The Fed will not deliberately maintain low interest rates.
Odaily Odaily reports that Federal Reserve Governor Waller stated that the Fed will not deliberately maintain low interest rates to help the US government finance its fiscal deficit. He believes it is reasonable to consider setting an inflation target range, and that Fed Chairman Warsh is reiterating the commitment to the 2% target, favoring a range for inflation. However, adjusting the inflation target at this stage would undermine the Fed's credibility. (Jinshi)
Waller: Overly aggressive forward guidance could become an obstacle.
According to Mars Finance, as reported by Jinshi, Federal Reserve Governor Waller stated that forward guidance, if "too hawkish or rigid," could become an obstacle to policy implementation.
U.S. Senator Warren wrote to Federal Reserve Governor Waller, demanding a halt to the rollout of regional Federal Reserve reform plans.
Odaily Odaily that U.S. Senator Elizabeth Warren has asked Federal Reserve Governor Christopher Waller to halt his efforts to reform the operational structure of the Fed's 12 regional branches. As the ranking Democrat on the Senate Banking Committee, Warren wrote to Waller on Wednesday, arguing that her proposed reforms to the Federal Reserve system might conflict with federal law and suggesting that they could undermine the Fed's independence. Although Waller, as chair of the Federal Reserve Board of Governors' Committee on Federal Reserve Affairs, possesses certain oversight authority, these regional branches were granted a high degree of autonomy from the outset, giving them control over their own day-to-day operations. "This proposal doesn't appear to be a serious reform of the Federal Reserve system, but rather an almost blatant attempt to appease Trump, who is seeking greater control over regional branch presidents," Warren wrote in the letter. "I request that you immediately cease all work related to this proposal and provide Congress with more information." (Bloomberg)
Trump stated that Warsh "must do what he has to do" and will continue to push for the dismissal of Federal Reserve Governor Cook.
According to Mars Finance, on July 3rd, following the release of the US June non-farm payroll report last night, US President Trump gave an interview and refused to offer advice to Federal Reserve Chairman Warsh, stating that the new chairman "must do what he has to do." Trump indicated that Warsh has a potentially hostile board, and unfortunately, this board may be trying to do the wrong things. Trump also stated that he will continue to push for the dismissal of Federal Reserve Governor Cook by "winning the lawsuit."