Warsh, 3 Central Bank Chiefs Reject Forward Guidance as Iran War Lifts US Inflation to 3-Year High
Updated
Updated · CNN · Jul 1
Warsh, 3 Central Bank Chiefs Reject Forward Guidance as Iran War Lifts US Inflation to 3-Year High
3 articles · Updated · CNN · Jul 1
Summary
Kevin Warsh said he had found “common cause” with Christine Lagarde, Andrew Bailey and Tiff Macklem in resisting forward guidance, with all four declining to signal the rate path at the ECB’s Sintra forum.
High economic uncertainty drove that stance: Warsh argued central banks should return to “first principles” because forecasting is less useful when policymakers cannot reliably predict the outlook.
A 3-year high in US inflation after the Iran war has sharpened the stakes, increasing the chance the Fed may need to hike rates for the first time since 2023 rather than cut.
Fed projections already show nearly all officials expect either a rate hike or no change this year, with only one penciling in a cut, underscoring how little support Warsh has for easing soon.
Warsh still paired his inflation focus with optimism on productivity, saying AI-driven gains could eventually create room for lower rates if the recent upswing proves durable.