IMF chief economist says Fed reduction in rate guidance is 'entirely appropriate'

IMF chief economist Pierre-Olivier Gourinchas said the Fed's move away from strong forward guidance is entirely appropriate, noting that rigid guidance had proven costly when US inflation surged in 2021-2022 but the Fed delayed rate hikes due to earlier commitments. New Fed chair Kevin Warsh has launched an ambitious review reshaping central bank communication, with the first policy meeting dropping forward guidance from the policy statement. Gourinchas added that other central banks are moving in a similar direction while still operating under inflation targeting regimes.