Forecasts Over Promises: Posen Urges Clear Fed Outlook Amid Sticky Inflation

Peterson Institute economist Adam Posen argues it’s acceptable for the Fed to avoid committing to a path via forward guidance, but it must publish a credible forecast about inflation and the economy. Fed Chair Kevin Warsh signaled that inflation remains the top concern and that the FOMC may need to raise rates again, possibly twice this year, though timing could slip into December/January due to elections. Posen warns that without a forecast, discussions become vague, and he anticipates inflation will persist, implying more tightening may be needed than markets currently expect.