Is the Federal Reserve relying on the market to tighten the financial environment itself? Analysis suggests that Kashkari downplaying forward guidance may undermine the precision of policy.

According to the Zhitong Finance APP, Fed Chairman Waller has been advocating for reforms in the communication of monetary policy since taking office, aiming to reduce the impact of forward guidance on the market and allowing financial markets to price more based on economic data. He also hopes to help achieve inflation suppression goals through changes in market interest rates. However, several economists, former Fed officials, and market strategists believe that while this approach may be theoretically feasible, it is a more "blunt" policy tool compared to directly adjusting the federal funds rate, which could increase market volatility and weaken the Fed's ability to precisely adjust the financial environment.