The new Fed chair, Kevin Warsh, has made it clear that he would like to make significant changes to the Fed’s monetary policy communication. He has argued that excessive communication isn’t helpful to the public and may constrain monetary policy decisions. He has been particularly critical of the Fed’s projections of the policy interest rate (the “dot plot”), arguing that policy makers “hold on to those forecasts longer than they should.”

At his confirmation hearing Warsh suggested that he could hold fewer press conferences, indicating that press conferences should only be held if there is “important news” to convey. He has also suggested that the publication of meeting transcripts should be paired back because publication, even with a lag, may lead policymakers to hold back in policy discussions for fear of being proved wrong later.

Why Scaling Back Communication Matters

While some of the concerns about communication are not new, and improvements in communication would be welcome, a broad scaling back of Fed communication would likely lead to worse economic and financial outcomes and reduced Fed accountability.

The increases in communication put in place........

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