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Overview: Mon, May 06

Daily Agenda

Time Indicator/Event Comment
11:3013- and 26-wk bill auction$70 billion apiece
12:50Barkin (FOMC voter)On the economic outlook
13:00Williams (FOMC voter)Speaks at Milken Institute conference
15:00STRIPS dataApril data

US Economy

Federal Reserve and the Overnight Market

Treasury Finance

This Week's MMO

  • MMO for May 6, 2024

     

    Last week’s Fed and Treasury announcements allowed us to do a lot of forecast housekeeping.  Net Treasury bill issuance between now and the end of September appears likely to be somewhat higher on balance and far more volatile from month to month than we had previously anticipated.  In addition, we discuss the implications of the unexpected increase in the Treasury’s September 30 TGA target and the Fed’s surprising MBS reinvestment guidance. 

Policy-making by Committee

Thomas Hoenig

Thu, August 26, 2010

We are trying to avoid the same group so that we get this group think that people can attribute if you only talk to the same people over and over... You don’t get good outcomes unless there is a broad diversity of views, discussion, debate.

William Poole

Wed, January 09, 2008

The St. Louis Fed President said when it comes to monetary policy changes, "ultimately, it's the chairman's call".

From the Q&A session as reported by Dow Jones

Donald Kohn

Fri, January 04, 2008

To be sure, the Committee looks to the Chairman to provide strong leadership.  The Chairman's special role is partly legal and structural--as the chair of the Board and the Committee and as the Committee's representative in front of Congress where the FOMC is held accountable for its actions... But in my experience, the other members of the Committee are also important for good policy.  Effective Chairmen cannot operate independently of the sentiment on the Committee; ultimately, the authority of the Chairman rests on his ability to persuade the other members of the Committee that the choices they are making under his leadership will accomplish their objectives.  The better the collection of individuals he needs to persuade, the better the policy is likely to be. 

...

Could the functioning of the FOMC be improved?  Certainly, and Chairman Bernanke has moved to further utilize the diverse views of the FOMC members, while maintaining the leadership necessary to keep this diverse group headed in the appropriate direction. 

Donald Kohn

Fri, December 01, 2006

In addition, the structure of the FOMC, like that of a number of foreign monetary authorities, may also provide Bayesian-like benefits in attempting to deal with uncertainty.  Many of the individuals who participate in policymaking at the Fed have different views about the structure of the economy.  These differences enter our discussions and, through the Committee’s deliberations, affect the course of policy, although, I admit, how we weigh these competing views to arrive at a decision can appear to be murky.  Certainly, the process is one that a good Bayesian might find hard to recognize.  Nevertheless, studies suggest that the decisions reached by committees are usually superior to those produced by individuals.

Vincent Reinhart

Wed, February 02, 2005

My experience in surveying you has been that if I ask the 19 of you “What is the color of an orange?” I couldn’t be sure of getting a majority on a single answer. [Laughter] This most recent survey was no exception. Almost as many of you strongly endorsed an expedited release of your projections as strongly opposed it. An equal number of you endorsed it as opposed it, and there were two lonely people who were indifferent. [Laughter] Thus, since expediting the release of the forecast is a decision that cannot be reversed, it doesn’t seem appropriate to move forward with a discussion of it today.

Ben Bernanke

Thu, October 07, 2004

My own view is that we are approaching the limits of purely qualitative communication and should consider the inclusion of quantitative information presented in a clearly specified framework. For example, like policymakers at many other central banks, the FOMC could specify its long-term inflation objective and include explicit economic forecasts, conditioned on alternative assumptions, in its statements or in regular reports. That being said, one must recognize that the FOMC is not a "unitary actor," as the political scientists term it, but a committee of nineteen highly independent people. With the best will in the world, achieving a Committee consensus on a detailed forecast (for example) will always be difficult in the short time available. Some ambiguity in the FOMC's communications may therefore be unavoidable.

MMO Analysis