During the second maintenance period, it was widely assumed that the intermeeting announcement of lower rates at 3:15 p.m. on October 15 reflected an abrupt action to deal with one or two troubled institutions. This then caused an extreme level of discount window aversion over the subsequent days, particularly as you can see in the chart on October 16, 19, 20, and 21. We faced a trading range that was consistently above the target, the blue line, during the morning on those days as banks held on to as many reserves as they could to avoid late day surprises and the risk that they might have an overdraft on their reserve account.

You may remember that in Jackson Hole a number of us got together and expressed the hope that we would be able to wait until today’s meeting to take whatever action was consistent with developments in our domestic economy. We did not want to be seen as rushed into action by events external to the United States and associated market forces. We felt that having to move earlier than today would clearly be seen evidence of a central bank that was scurrying to catch up. We have succeeded in staying on schedule, if I may use that term, and hopefully we will continue to do so.

Again, what I think we should do is for this Committee to establish the guidelines; that decision should be made here [today] because we're being gamed very much the way the European central banks were being gamed. With each major statistic that comes out, people take sides: [people talk about] the possibility that someone may have some inside knowledge or rumors spread that someone has it and that's going to affect Fed actions; that is what is driving markets.  Frankly, I think that's increasing the instability in the markets. And the way to restore stability to the markets in part is to have this body make decisions and have a fixed date rather than an effectively random date for taking actions.