The Globe and Mail reports in its Thursday, Aug. 20, edition that Federal Reserve Chair Kevin Warsh was uncommunicative about the Fed's strategy in July, dividing economists on when the next rate adjustment will occur. The Globe's contributing columnist Kevin Yin writes that Mr. Warsh's mistake is confusing forward guidance, a policy tool he dismisses, with the essential guidance on central bank thinking. Forward guidance in monetary policy refers to the central bank's commitment to keep interest rates at a specific level, either unconditionally or based on its forecasts for future conditions. It represents a commitment or prediction about future rates. Many economists agree with Mr. Warsh that forward guidance can be overly restrictive for the Fed. If the Fed commits to a specific interest rate path or states rates will remain low due to expected low inflation, unexpected conditions may force it to deviate, harming its credibility. Deviating from stated policies can lead to higher inflation or unemployment. Forward guidance is most effective at the zero lower bound when interest rates can't drop further, as it allows the central bank to stimulate the economy by promising improved future financing conditions.