Williams says the era of explicit Fed forward guidance is over
Published
Federal Reserve Bank of New York President John Williams said the time for explicit, direct forward guidance has passed, days after the central bank raised interest rates for the first time since 2023.
The remark lands amid a wider split among Fed officials over what comes next. Governor Michael Barr, speaking a week after that rate increase, said the central bank had been out of position but has since moved in the right direction, arguing that inflation risks now outweigh concerns about the labor market. Barr's comments add to a growing list of officials pointing toward further tightening.
Chicago Fed President Austan Goolsbee's own remarks reinforce that hawkish tilt, citing persistent inflation risks and signaling more rate increases ahead. Not every official agrees. Richmond Fed President Thomas Barkin has said the Fed cannot count on markets alone to hold inflation down, and that he wants this cycle to resemble the mid-1990s adjustment rather than a prolonged tightening campaign. Council of Economic Advisers Chairman Kevin Hassett has gone further, questioning last week's rate increase itself.
Williams' move away from explicit guidance fits the Fed's broader shift toward data dependence following last week's hike, but it leaves untouched the disagreement driving markets: whether current inflation is demand-driven, which would call for more rate increases, or supply-driven, which would make further hikes less effective. The shift changes how the Fed talks about policy, not where policy is headed.