Claire Jones

This is what Walsh wants, in a way, is for markets to speculate.

So we've been in an era where central banks have really spelt out not only what the decisions are at the moment, but what they're likely to do in the future.

And Walsh does not like this so-called forward guidance.

What he's looking at doing is rowing it back.

We saw the first attempts by him to row it back last week, and more is expected in the pipeline and

That's what's got some investors concerned, really.

We saw Walsh not submit a dot to the dot plots which outline the future path for U.S.

interest rates.

We also saw a truncated statement with no steer on whether or not the Fed expects the next moving interest rates to be up or down.

And what that led to in the markets were bets that we'd see more interest rate hikes in the coming months.

We saw two-year yields, which are very sensitive to monetary policy, move up quite dramatically to their highest level in more than a year.

Well, indeed, and this is what Walsh wants in a way is for markets to speculate.

What he argued for in the press conference is that we've entered this world where because central banks are offering so many clues as to what comes next, Wall Street is trying to second guess the Fed rather than come up with its own judgment on what should happen to interest rates based on reading the economic data.

He wants to see markets take a more

proactive approach in terms of reacting to the economic news and judging what that means the best course for monetary policy is.

I think you're absolutely right.

I mean, we're returning to the sort of world that we had before the financial crisis, something more akin to the era of Alan Greenspan, whom Walsh has said he's a fan of.

The issue is, is that we've now had decades in which the market has had these very clear signals.

We've had a generation of people in financial markets who are used to this communication from the Fed itself.

And the issue is, is that now if you take that away and reintroduce this element of surprise, you're likely to get more volatility from people who just don't really know how to read the Fed without these very explicit clues.