According to external sources, the first press conference since the arrival of the new Federal Reserve Chairman, Kevin Walsh, has begun to adjust the way the Federal Reserve has communicated in recent years. In contrast to previous efforts to place greater emphasis on transparency and routing, he reduced the length of the interest-rate resolution statement and made it clear that it no longer implied the next interest-rate move.

This change has impacted market expectations first. It was mentioned that the United States share had fluctuated markedly with the United States debt following the issuance of the resolution and the press conference. 10 Annual United States debt return increased from 4.43 per cent to 4.49 per cent and then fell;2 annual United States debt return increased from 4.05 per cent to 4.16 per cent before the meeting; and the Standard 500 index fell by 1.2 per cent that day.

Declaration shortened to 132 words

Walsh compresses the interest rate resolution statement to 132 words, which is significantly less than 341 in April. He also noted, in particular, that the statement did not contain any “forward guidance” on the way forward for policy action.

According to the report, this means that the Federal Reserve is weakening the policy communication system that has been in place for more than a decade. Since the global financial crisis, the Fed has increasingly relied on more frequent press conferences, quarterly economic forecasts and forward-looking guidance to manage market expectations. Today, this direction is reversed.

Matthew Luzzetti, the chief American economist at Deutsche Bank, said that since the 2008 - 2009 global financial crisis, the Fed’s communication has been moving towards “more transparency, more communication, more forward-looking guidance,” and Walsh is now reversing the path.

Markets or more dependent on officials to speak

According to external sources, the removal of the forward-looking guidance would not necessarily weaken policy signals, but rather might give greater visibility to the statements of other Federal Reserve policymakers. The reason for this is that when the Chair no longer gives a road signal in advance, the market will be more active in seeking clues from public statements by other officials.

Bespoke Investment Group, a global macro strategist, George Parkes, states that looking ahead helps to reduce volatility and stabilize market expectations of interest rates. If such guidelines are reduced, equity debt prices may fluctuate more and the cost of financing for enterprises and residents may rise slightly.

He also suggested that future public statements by 18 interested members of the Federal Open Market Commission might have a greater influence on market judgement than in the past. These members include the Federal Reserve Council and the Governor of the Regional Federal Reserve Bank.

Walsh started five reviews at once.

In addition to the means of communication, Walsh announced the establishment of five working groups to review the Federal Reserve ' s communication mechanisms, balance sheets, economic data analysis and collection, the impact of artificial intelligence on productivity and employment, and the inflation analysis framework.

Among these, the Communications Working Group will assess whether the quarterly economic projections need to be adjusted and will revisit the institutional arrangements that have emerged in recent years, such as the press conference. The report states that this is in stark contrast to the Greenspan practice. In other cases, the Fed Chairman usually does not explain the decision to the press in detail after the meeting.

However, the article also notes that forward-looking guidance still has a stabilizing role for markets in times of crisis. David Andolfatto, a professor of economics at the University of Miami, stated that he agreed that there were shortcomings in forward-looking guidance, because war or sudden shocks could quickly disrupt existing paths, but if such guidance were to be removed, the Fed would still need to give the market a clearer idea of an emergency response.

According to the article, the long-term sustainability of Walsh ' s new approach remains dependent on future recessions, financial turmoil or new inflationary shocks. Once the market enters a high-pressure phase, the Fed will face a more direct test of whether it continues to reduce communication.