The US Federal Reserve under new chair Kevin Warsh has abandoned forward guidance and dot-plot forecasts, arguing that explicit signals of future interest rates lack credibility given repeated inflation shocks since 2020, according to analysis in the Guardian.

Warsh has launched a comprehensive review of Fed operations with 15 outside advisers, including former Bank of England governor Mervyn King, who has called forward guidance "silly" given the uncertainty central banks face. The move reflects criticism that the Fed, the European Central Bank and Bank of England moved too slowly to counter inflation after the Ukraine war in 2022, when UK and eurozone inflation exceeded 10%.

The shift leaves markets and the public without explicit guidance on the path of rates or how the Fed will respond to economic developments, said Charlie Bean, a former deputy governor of the Bank of England. US inflation fell to 3.4% in July but faces renewed upward pressure from rising oil prices linked to tensions in the Middle East, Phillip Inman reports for Guardian business.