Expect Two Shallow Recessions, and a Quick End to the Fed’s Hikes

Updated July 25, 2022 / Original July 22, 2022

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Forward guidance sounds like a great idea. Central bankers should lay out their longer-term goals to influence financial markets. Just as hockey great Wayne Gretzky would skate where the puck was headed, instead of where it was, monetary authorities would try to guide markets where policy was expected to be months ahead. But central bankers are rather less adept than the Great One in determining where the puck is going.

The Federal Reserve effectively has scuttled forward guidance, opting instead for leaks of decisions by its policy-setting Federal Open Market Committee a few days before meetings. Just as well, since there have been erratic zigzags of late.

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