Waller's remarks add to signs of an unusual public divide within the Fed over how much the central bank should say about its future rate path, at a moment when Warsh has already stripped forward guidance language from the post-meeting statement. Markets will likely watch Wednesday's release of the minutes from Warsh's first meeting for further clues on how far that communications shift extends, particularly around quarterly rate projections and press conferences. Waller's point that clear guidance can pull forward the effect of policy, as seen in the sharp rise in short-term Treasury yields between September 2021 and February 2022, underscores the risk that a less communicative Fed could see policy transmission slow rather than speed up. With officials currently split over whether inflation or employment poses the bigger risk, any ambiguity in messaging could add to rate volatility around coming meetings.---Fed Governor Christopher Waller says forward guidance remains a valuable policy tool when used flexibly, contrasting with Chair Kevin Warsh's more cautious approach, as markets await Wednesday's minutes for clues on further communications changes.Earlier:Fed;s Waller: Forward guidance can be a valuable tool that has strengthened policymakingMore from Waller: Fed policymakers have always been committed to 2% inflationSummary:Forward guidance can speed the impact of monetary policy but becomes problematic if applied too rigidlyIn fall 2021, Fed signalling of coming rate hikes pushed market rates higher months before an actual rate increase in March 2022Waller's approach differs from Fed Chair Kevin Warsh's, with Warsh having removed references to future rate moves from the post-meeting statementFed communications, including the use of forward guidance, quarterly rate projections and press conferences, are set to be reviewed by task forces Warsh plans to name this weekRigid guidance adopted in September 2020 tied the Fed's hands in 2021 and delayed rate increases until March 2022Waller says guidance is harder to give when multiple economic scenarios are equally likely, as officials are now split over inflation versus employment risksForward guidance remains a valuable tool for the Federal Reserve, Governor Christopher Waller said Monday, but only when it is applied with enough flexibility, a message that puts him at odds with the more guarded approach favoured by Fed Chair Kevin Warsh. Speaking at a Bank of Italy conference in Rome on monetary policy transmission, Waller said guidance had at times significantly strengthened policymaking and would continue to be useful, even as he acknowledged it has occasionally done more harm than good.Waller pointed to the fall of 2021 as an example of guidance working well. When the Fed began signalling coming rate hikes that September, market interest rates started rising steadily, even though changes in the policy rate typically take one to two years to filter through the economy. He noted the two year Treasury yield rose nearly 200 basis points between September 2021 and mid February 2022, well before the Fed's first hike in March that year, effectively pulling forward the economic impact of tightening by roughly six months.But he also pointed to instances where guidance backfired. Rigid language adopted in September 2020, tying rate liftoff to specific employment and inflation conditions, left the Fed boxed in during 2021 even as inflation rose quickly, delaying rate increases until March 2022. Waller added that guidance becomes especially difficult when several economic scenarios appear similarly likely, a dynamic he compared to approaching a yellow traffic light with no clear default response. Fed officials are currently split over whether inflation or employment risks pose the greater threat.His comments contrast with Warsh's preference for saying less, a stance already reflected in the removal of language on future rate adjustments from the statement issued after his first meeting as chair. Fed communications are expected to be one focus of task forces Warsh plans to name as soon as this week, with minutes from his first meeting due Wednesday likely to offer further clues on the scope of any changes. This article was written by Eamonn Sheridan at investinglive.com.