The Fed Is Fighting the Wrong Inflation. Warsh needs to show leadership! Warsh wants to scrap forward guidance and dot plots while leaving Fed officials free to broadcast their policy preferences. That does not end forward guidance. It hands the microphone to hawks and disgruntled colleagues, allowing their pronouncements to shape expectations. The result is neither coherent communication nor disciplined policymaking. A central bank should distinguish a fading supply shock from persistent demand pressure, not let its loudest voices dictate the response. October’s CPI rose 0.4 per cent, with core up 0.3 per cent. Governor Waller is floating a half-point December increase. A tenth above expectations, and out comes the sledgehammer. Yet services accounted for nearly 90 per cent of core inflation, with shelter contributing half of core services. Owners’ equivalent rent, an estimate, not a payment homeowners make, dominated shelter rent. Housing scarcity is not a wage-price spiral. Higher rates can aggravate it by raising construction costs and locking homeowners into existing mortgages. The supposed cure risks feeding the disease. Meanwhile, the energy shock is unwinding. West Texas crude has fallen more than 20 per cent from late October; wholesale gasoline is down 27 per cent since September. One-year inflation swaps are below 2 per cent. Six-month annualised core CPI is 2.7 per cent; Dallas trimmed-mean PCE is 2.4 per cent. Third-quarter productivity rose 3.6 per cent annualised, while unit labour costs fell 0.7 per cent. These figures demand judgment, not reflexive tightening. Raising rates into easing energy prices and falling labour costs would risk turning a temporary inflation shock into recession.