Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Getting back to other communication issues, I have, first, a bit on the January meeting. Our January meeting will be another two-day meeting, and part of it will be on communication issues. This one will be on forecasts. What can we do to improve the way we communicate our outlook about the economy—really the medium-term outlook—and how it fits into our explanations of monetary policy actions. The focus is not so much on how we would use this to signal our price stability objective, which we will come back to in March. Obviously, the two considerations are closely related, but the focus will really be on the forecasting process and how we can do it better and communicate about it better. Three sets of background materials are in preparation: (1) a memorandum from International Finance on foreign experience with forecasts; (2) a memo from Research and Statistics on some of the choices available to us—the variables, conditioning assumptions, periodicity, and things like that; and (3) a memo from Monetary Affairs on the interaction of these various choices with the governance of the Committee—that is, who owns the forecast and the explanation.

Moving on to the memo that you received from the subcommittee on communications—as you know from that memo, several Committee members thought it would be useful at this meeting to have at least a brief discussion about how we as individuals talk in public about the subjects of ongoing deliberations on communication issues. I include myself in that list of people who thought that this discussion would be useful, without necessarily implicating the other members of the subcommittee. We are concerned that our individual public statements could impede our ability to reach internal consensus and to control how whatever that consensus turns out to be is communicated to the public. I think that finding consensus on some of these issues is going to take considerable flexibility and give and take among Committee members. One concern is that the more individuals sort of pre-announce their positions, particularly in public, the harder it’s going to be to find that consensus around the table. We are in this process. There’s no need to push the Committee toward doing something. The Committee is doing something, and I think we need to keep all our individual options open as we go forward. Another problem is communication with the public. One of my concerns is that statements by individuals about their particular positions risk confusing the public about where we might come out, setting up inaccurate expectations of where we’re coming out, and provoking reactions in the public about something that the Committee might not be doing. Whatever we come up with, the Committee and the Chairman are going to have to keep close control on how we roll it out to the public and how we tell people what we’re doing and why. No one should be or can be expected to repudiate his or her past positions—say, on comfort zones—but we can think about not elevating the topic, not bringing it up so much ourselves, not pushing it further in public while the Committee is deliberating.

We sent this memo really to get Committee reactions. To be effective, we need a consensus on this issue among the Committee members—and I would include the staff sitting around the edge of the room—to control our public statements on this issue. If some of us do it and others don’t, it isn’t going to work. So I would be interested in your reactions. Thank you, Mr. Chairman.

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