Kevin Warsh skips forward guidance for second Fed meeting

Federal Reserve Chair Kevin Warsh has skipped forward guidance for two straight meetings, breaking a long-standing Fed practice of signaling rate-path intentions to calm markets.

The Fed used to tell investors whether rates might rise, fall or stay flat at the next meeting. That helped traders adjust portfolios before surprises hit. Warsh now argues this guidance hurts markets by making them focus on the Fed’s next move instead of the economy itself. He says markets should react to data, not to what officials might say next.

Past Fed chairs—including Janet Yellen and Jerome Powell—used carefully worded statements to give markets time to brace for change. When guidance was missing, one-day sell-offs often followed. In 2011, stocks dropped 7% after an unexpected Fed signal; in 1994, a surprise hike roiled bonds. Warsh believes such shocks are less likely if the Fed stays silent and lets data drive decisions instead.

Investors and economists worry the new approach increases risk. Without a roadmap, sudden rate moves can spark panic selling or force the Fed to reverse course. Warsh insists his colleagues can handle fast-changing data, but markets may not react as smoothly without advance notice. Next week’s meeting will show whether traders start pricing in bigger swings—or if the Fed’s silence sparks fresh volatility.