Robert E. Hall of Stanford University and Michael Woodford of Columbia University won the 2026 economics Nobel "for microeconomic foundations of macroeconomic stabilisation," the Royal Swedish Academy of Sciences said on Monday. The prize is 12 million Swedish kronor, shared equally. The Academy's own scientific background credits Woodford, among others, with proposing forward guidance, the practice of telling markets where interest rates are headed.

Forty-five days earlier, on 28 August, Federal Reserve Chair Kevin Warsh used his Jackson Hole speech to argue for "a quieter Fed." In the Fed's published text he said forward guidance "has overstayed its welcome." It is tempting to call that a collision between the laureates and the Fed. It is not quite one. The gap that does exist is narrower, and more useful.

The laureates built macroeconomic models on a microeconomic foundation, instead of on statistical links between aggregates such as inflation, production and consumption, the Academy said. In its press release it said they "have helped us smooth out the economy's peaks and troughs," and that a central part of the models is that households and businesses look ahead: "When governments and central banks communicate their plans for economic policy, they can influence this view of the future."