Accuracy in Economic Forecasting Is an Aspiration, Says Fed Chair Warsh

• Forward guidance is considered ill-suited for normal times and may have slowed the Fed's policy response to high inflation in 2021.
• Economic understanding is not precise enough to provide mechanical, 'tried and true' answers or rigorously rely on simple functions like a Taylor rule.
• Accuracy in economic forecasting is described as 'still just an aspiration' due to rapid changes in geopolitics, global supply chains, and technology, necessitating more reliable models and robust rules.

Former Federal Reserve Chairman Kevin Warsh critiques forward guidance, arguing it's ill-suited for normal times and may have hindered the Fed's response to 2021 inflation. He emphasizes that economic forecasting lacks the precision for mechanical rules, advocating for more robust models and a broader range of ideas in monetary policy discussions.