February 21, 2024

Quantitative tightening and forward guidance need to be reconsidered, experts argued at a meeting hosted by the Atlanta Federal Reserve Bank on May 15.

Christine Forbes, a professor of management and global economics at the Massachusetts Institute of Technology, said forward guidance locks the central bank into a policy horizon. Recent experience suggests central banks need to keep options open, she said.

When you issue forward guidance, it becomes more difficult to pivot as economic conditions change, saying