Fed Governor Waller: Transparent communication is better than "never explaining", and the Federal Reserve needs to clarify its response rules.

Federal Reserve Governor Waller stated that the Federal Reserve must establish clear and consistent policy reaction rules, otherwise markets will be unable to make predictions. He added that while specific quantification of the reaction function may have flaws, it is highly important from a qualitative perspective; his views on the perfection of the reaction function differ sharply from those of Federal Reserve Chair Walsh. On the issue of Federal Reserve transparency, Waller said surprising the markets serves no benefit, criticizing the "never explain" approach as an outdated and ineffective model, noting that appropriately disclosing future policy directions would be preferable. Waller also noted that there are significant internal disagreements within the Federal Reserve over communication matters, with strong opposition to scenario analysis emerging last year, and it remains unclear what the communication working group will achieve. Regarding discussions of the balance sheet working group, he will oppose any proposals that would push reserves back into a scarce state. For the data working group, he emphasized the need to guard against trust issues, advocating for the use of verifiable data, and added that the inflation working group may be most helpful to the Federal Open Market Committee (FOMC).