May 9, 1961 FOMC Minutes

FOMC minutes

Mr. Hayes then referred to the inclusion on the agenda for this meeting of a preliminary discussion of the publication of the record of policy actions of the Federal Open Market Committee more frequently than on an annual basis; for example, on a quarterly basis after a lag of one full quarter. Mr. Hayes said it had seemed appropriate to Mr. Balderston, to him, and to Mr. Sherman to consider this question, which he knew had been thought about from time to time by most of those around the table. He noted that under the present procedure of publishing the record of policy actions for each calendar year in the Board's Annual Report, the time lag before publication of the respective actions ranged from roughly three months to 15 months. This time lag had led to quite a bit of criticism from outside the System, and some comment within the System. Therefore, the question arose whether, without taking undue risk in the execution of policy, it would be possible to release the policy record on a regular quarterly basis with approxi mately a three-month time lag. This might be accomplished, perhaps, through publication in the Federal Reserve Bulletin or by means of a special release. Mr. Hayes then turned to Mr. Balderston, who commented that it seemed rather difficult to answer criticisms of a 15-month time lag, when in some cases there was only about a three-month lag before pub in the Annual Report. He was not too much in lication of actions terested at this point in the question of procedure for publication,

but he had in mind that perhaps the record for each of the first three quarters of the year might be the subject of a press release. As he saw it, a time lag of at least three months would be desirable, which would mean that in July the record of policy actions taken during the first quarter of the year would be released. Presumably, the policy record would continue to be presented in the usual manner in the Annual Report, with the record of actions taken during the of the year being released initially in the Annual fourth quarter Report. In further discussion, Mr. Deming suggested that some of the directed toward the System on this general subject would criticisms not stand up under examination. It was not a fact that the public of what the System was doing for a period of as long as was unaware the public did not have access Rather, it was simply that 15 months. record of policy actions and the specific wording of to the official by the Committee to the Federal that had been given the directives in the discount rate, reserve Reserve Bank of New York. On changes were given to the press and margin requirements, notices requirements, limitations there were explanations of System immediately, and within comments by System spokesmen. There actions, often in the form of kept reasonably up to date on System policy. fore, the public was he would have no particular objection to pub Accordingly, although record of Committee policy actions at three-month inter lishing the he doubted that some of the criticisms vals, with a three-month lag,

that had been heard would be satisfied thereby to a much greater extent than under present procedures. Mr. Hayes suggested that in addition to specifying the di rective, the policy record entries served to explain the rationale of Committee actions. While certain interpretations of System actions were made during the course of any given year, an explanation released by the System through publication of the policy record would have the advantage of being fully authentic. Mr. Deming noted that Chairman Martin testified regularly before Congressional committees and that other official statements were made from time to time with regard to System policy. Given this situation, he doubted that quarterly release of policy record would add much to the knowledge of the Congress or others. As he had said, he did not wish to quarrel particularly with the idea of quarterly publication, but he doubted whether it would fully satisfy some of the criticisms that had been made. inquired whether the reason for placing the Mr. Robertson matter on the agenda had not been to call attention to the fact that this possibility was under consideration rather than for the purpose of debating the matter today. that no action had been contemplated at to Mr. Hayes replied He added that he had mentioned the matter in telephone day's meeting. conversation with Chairman Martin, who seemed generally sympathetic in principle but felt that timing was important and that any decision on implementing the suggestion should be considered carefully.

In further discussion Mr. Wayne suggested that the possibility of more frequent publication of the policy record be studied primarily from the point of view of a move on the part of the System to develop better public understanding of its policies. From this standpoint an argument could be made in favor of such an approach apart from endeavor ing to meet any criticisms that had been directed at the System. Mr. Hayes stated that he thought this was an important point and that he was glad Mr. Wayne had brought it up, following which Mr. Bryan expressed the view that a decision to release the record of pol icy actions at frequent intervals would have dangerous implications. Therefore, he said, he would want to debate the matter vigorously at Messrs. Mills and Irons indicated that they con the proper time. curred in the view expressed by Mr. Bryan. stated that the matter could be included on the Mr. Hayes then next meeting of the Committee with a view to further agenda for the if anyone cared to do so, he could let the discussion. Meanwhile, Secretary of the Committee have his comments. the next meeting of the Committee would be It was agreed that held on Tuesday, June 6, 1961. The meeting then adjourned. Assistant Secretary