"The Fed Transmitter": The Federal Reserve's shift to a tightening cycle is precisely when "forward guidance" takes effect.

on October 27, "Fed whisperer" Nick Timiraos wrote that Warsh's appointment coincided with the Federal Reserve pivoting to a tightening cycle; historically, this phase is typically when "forward guidance" plays a crucial role. "Forward guidance" is generally believed to have originated during the 2008-2009 period and the subsequent era of ultra-easy monetary policy, because the Fed heavily relied on this tool when interest rates hit the "zero lower bound." However, the history of forward guidance can actually be traced back to 1999.

At that time, Fed officials sought to reverse the 1998 rate cuts while avoiding a repeat of the 1994 rate hike, where insufficient communication caught the market off guard. Therefore, in May 1999, the Fed made its first attempt to issue a policy statement after a meeting that held rates steady. Previously, the Fed only released statements following meetings where interest rates were adjusted. Six weeks later, the Fed hiked rates. The May 1999 meeting minutes revealed that officials already recognized a high probability of a rate increase and intended to guide market expectations through this measure. Officials did not want the market to misinterpret their policy intentions. (Jin10)