Federal Reserve Chairman Kevin Warsh has steered the central bank into an era of less transparency. Former Fed governors Donald Kohn and Stephen Miran, as well as Goldman Sachs Chief Economist and Head of Goldman Sachs Research Jan Hatzius, discuss on the Goldman Sachs Exchanges podcast the merits of Fed communication and how it affects financial markets. The episode is based on the latest Top of Mind report.
Key takeaways:
Kohn says there is a “golden mean” in which financial markets have some information from the Fed, such as a narrative that helps investors process incoming data, without central bank officials providing too much specific information about their policy plans.
Reducing forward guidance would improve the signal that financial markets provide, and the additional volatility is worth the trade-off, Miran says. He argues that too much guidance from Fed officials can increase volatility in the longer run.
Hatzius says markets will always price what they think the Fed will do—not what they think the Fed should do—even if the central bank provides less information about how it adjusts policy in reaction to economic data.
This episode was recorded in August 2026.
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