"Fed Whisperer": As the Fed shifts to a tightening cycle, it is precisely the time for "forward guidance" to play its role.

Nick Timiraos, known as the "Fed whisperer," wrote that Warsh's arrival coincides with the Fed's shift to a tightening cycle; from historical experience, such periods are often precisely when "forward guidance" plays a key role. People generally believe that "forward guidance" originated in 2008-2009 and the subsequent period of ultra-loose monetary policy, because at that time, when interest rates hit the "zero lower bound," the Fed did indeed rely heavily on this tool. But in fact, the history of forward guidance can be traced back to 1999. At that time, Fed officials wanted to withdraw the 1998 rate cut while also seeking to avoid repeating the mistake of 1994, when insufficient communication caught the market off guard during a rate hike. Therefore, in May 1999, the Fed first attempted to issue a policy statement after a meeting at which rates were left unchanged. Previously, the Fed would only issue statements after meetings at which rates were adjusted. Six weeks later, the Fed raised rates. The minutes of the May 1999 meeting show that officials were already aware that a rate hike was highly likely and hoped to use this to guide market expectations. Officials did not want the market to misinterpret their policy intentions.