Goldman Sachs's latest research report points out that Federal Reserve Chairman Walsh is pushing the central bank into a new stage of declining transparency, including shortening post-meeting statements, reducing forward-looking guidance, and weakening the role of economic forecasting. This change marks a clear shift in the direction of central bank transparency reforms over the past 25 years. Goldman Sachs chief economist Jan Hatzius believes that reducing transparency is generally a negative impact. He said that the core value of central bank transparency is to let the market understand the Federal Reserve's “response function”, that is, the policy path it may adopt in the face of different economic changes, thereby helping the market adjust financial conditions ahead of time and speed up the transmission of monetary policy. Goldman Sachs pointed out that the key to reducing the impact of transparency on the market is changes in volatility. The Goldman Sachs Interest Rate Strategy Team believes that the market has begun to take into account the uncertainty brought about by reduced communication with the Federal Reserve, and the July FOMC meeting became one of the biggest market surprises in the past 30 years without interest rate cuts. Hatzius warned that the market is not about “what the Fed should do,” but “what the market thinks the Fed will do.” If the Federal Reserve weakens response function communication, the market's judgment on future policies may be even more inaccurate, leading to more fluctuations that lack economic significance.

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