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Monetary Policy Review was **supposed** to be a review of the Fed’s
(a) strategy
(b) tools
(c) communication
Time for a #Fedthread
[1/21]
(a) strategy
(b) tools
(c) communication
Time for a #Fedthread
[1/21]
99% of the attention went to strategy (as fait would have it)
1% went to tools (nothing concrete, new, actionable)
And communication got almost no attention at all
This is unsurprising - but incredibly frustrating
[2/21]
1% went to tools (nothing concrete, new, actionable)
And communication got almost no attention at all
This is unsurprising - but incredibly frustrating
[2/21]
Central bankers are notoriously bad communicators.
#Greenspanthrowback
- If I seem unduly clear to you, you must have misunderstood what I said
- I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant
[3/21]
#Greenspanthrowback
- If I seem unduly clear to you, you must have misunderstood what I said
- I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant
[3/21]
Now, the Fed has made a few giant’s steps since Greenspan. In fact, Chair Powell’s speech announcng the results of the review his **only** mention of communication was “[since Greenspan, we’ve] made great advances in transparency and communications” https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm
[4/21]
[4/21]
But remember that the current FOMC is a 17 participant committee...maybe some of the others mention communication? Let’s find out:
[5/21]
[5/21]
VC Clarida - rightly, though briefly, celebrates how open the review process was. Which is true! Lots of public meetings for regular folk, academics, business leaders, finance folk. 
[6/21]
[6/21]
But what about the communication going forward? This little line,
“our new consensus statement does bring greater clarity and transparency to the way we will conduct policy going forward”
So what does it say? Let’s see..
[7/21]
“our new consensus statement does bring greater clarity and transparency to the way we will conduct policy going forward”
So what does it say? Let’s see..
[7/21]
It actually starts out in a very nice direction 
(pic 1)
And….then clarity dies, drowned in the deep dark ocean of economic oblivion
(pic 2)
Plus, is this it? One extra paragraph in the “Statement on Long-run Goals” ??
[8/21]
![It actually starts out in a very nice direction (pic 1)And….then clarity dies, drowned in the deep dark ocean of economic oblivion (pic 2)Plus, is this it? One extra paragraph in the “Statement on Long-run Goals” ??[8/21]](https://pbs.twimg.com/media/EhBKas9XYAEyM1v.jpg "It actually starts out in a very nice direction (pic 1)And….then clarity dies, drowned in the deep dark ocean of economic oblivion (pic 2)Plus, is this it? One extra paragraph in the “Statement on Long-run Goals” ??[8/21]")
![It actually starts out in a very nice direction (pic 1)And….then clarity dies, drowned in the deep dark ocean of economic oblivion (pic 2)Plus, is this it? One extra paragraph in the “Statement on Long-run Goals” ??[8/21]](https://pbs.twimg.com/media/EhBKas8XkAET39t.jpg "It actually starts out in a very nice direction (pic 1)And….then clarity dies, drowned in the deep dark ocean of economic oblivion (pic 2)Plus, is this it? One extra paragraph in the “Statement on Long-run Goals” ??[8/21]")
(pic 1)And….then clarity dies, drowned in the deep dark ocean of economic oblivion
(pic 2)Plus, is this it? One extra paragraph in the “Statement on Long-run Goals” ??
[8/21]
That’s it. A shout out to the process and reference to a new statement.
It’s worth pointing out that VC Clarida is in charge of the “Subcommittee on Communications”. Bummer! Maybe he got distracted with corona response stuff and will announce something soon
[9/21]
It’s worth pointing out that VC Clarida is in charge of the “Subcommittee on Communications”. Bummer! Maybe he got distracted with corona response stuff and will announce something soon
[9/21]
What about the other 15 members?
VC Quarles - no public speeches
Gov. Brainard - one sentence letting us know that communication would have been harder if they’d announced the inflation target without “flexible”. Nothin else. https://www.federalreserve.gov/newsevents/speech/brainard20200901a.htm
[10/21]
VC Quarles - no public speeches
Gov. Brainard - one sentence letting us know that communication would have been harder if they’d announced the inflation target without “flexible”. Nothin else. https://www.federalreserve.gov/newsevents/speech/brainard20200901a.htm
[10/21]
Gov. Bowman - no public speeches
Rosengren (Boston) - no public speeches
Williams (NY) - not a single word https://www.newyorkfed.org/newsevents/speeches/2020/wil200902
[11/21]
Rosengren (Boston) - no public speeches
Williams (NY) - not a single word https://www.newyorkfed.org/newsevents/speeches/2020/wil200902
[11/21]
Harker (Philadelphia) - no public speeches
Mester (Cleveland) - one sentence admitting that clear communication “can also make any monetary policy actions we take more effective.” But nothing about what clear means. https://www.clevelandfed.org/en/newsroom-and-events/speeches/sp-20200902-an-update-on-the-economy-and-monetary-policy.aspx
[12/21]
Mester (Cleveland) - one sentence admitting that clear communication “can also make any monetary policy actions we take more effective.” But nothing about what clear means. https://www.clevelandfed.org/en/newsroom-and-events/speeches/sp-20200902-an-update-on-the-economy-and-monetary-policy.aspx
[12/21]
Barkin (Richmond) - no public speeches
Bostic (Atlanta) - no public speeches
Evans (Chicago) - Similar to VC Clarida highlights new consensus strategy, “One of the lessons that monetary policymakers have learned…
https://www.chicagofed.org/publications/speeches/2020/covid-19-and-the-future-of-the-economy
[13/21]
Bostic (Atlanta) - no public speeches
Evans (Chicago) - Similar to VC Clarida highlights new consensus strategy, “One of the lessons that monetary policymakers have learned…
https://www.chicagofed.org/publications/speeches/2020/covid-19-and-the-future-of-the-economy
[13/21]
...is that policy is most effective when it is clearly understood by the public. I think our new consensus strategy is another important step in providing this kind of transparency” Again, that’s it?
Bullard (St Louis) - no public speeches
[14/21]
Bullard (St Louis) - no public speeches
[14/21]
Kaplan (Dallas) - no public speeches...since February??? https://www.dallasfed.org/news/speeches/kaplan.aspx
Kashkari (Minneapolis) - no public speeches
George (Kansas City) - no public speeches
Daly (San Francisco) - no public speeches
[15/21]
Kashkari (Minneapolis) - no public speeches
George (Kansas City) - no public speeches
Daly (San Francisco) - no public speeches
[15/21]
It’s been one week since the announcement and of the 17 leaders of the Fed, 11 haven’t said a word about it at all. And the best we got out of the 6 that did mention it was “communication is important and we’re better at it today than we were 30 years ago.”
[16/21]
[16/21]
Right before I hit publish on these tweets @NickTimiraos published an interview with Mester (Cleveland) and she said, “people understand where we’re going”
…do they? who does? financial markets, sure, maybe. Is that all that matters?
https://www.wsj.com/articles/cleveland-fed-president-says-monetary-policy-is-well-communicated-11599160969?st=3xw2o5pf6nmjnjm&reflink=article_copyURL_share
[17/21]
…do they? who does? financial markets, sure, maybe. Is that all that matters?
https://www.wsj.com/articles/cleveland-fed-president-says-monetary-policy-is-well-communicated-11599160969?st=3xw2o5pf6nmjnjm&reflink=article_copyURL_share
[17/21]
I don’t have a full-blown communication strategy recommendation yet. But any strategy would answer the 101 level questions:
1. Who? (Financial markets, Big businesses, Small/medium businesses, Individuals in general, Homeowners, Students, Politicians)
[18/21]
1. Who? (Financial markets, Big businesses, Small/medium businesses, Individuals in general, Homeowners, Students, Politicians)
[18/21]
2. What do these groups need to know?
3. Why do they need to know it? How would they benefit by understanding it?
4. How are you going to reach these groups?
[19/21]
3. Why do they need to know it? How would they benefit by understanding it?
4. How are you going to reach these groups?
[19/21]
One of the most important lessons that Geithner, Paulson, and Bernanke have reiterated over and over again is that their biggest failure in the response to the GFC was —- communication.
[20/21]
[20/21]
As Geithner put it in his 2014 memoir, “we did save the economy, but we lost the country doing it.”
I’ll simply end with saying that the Fed has an incredibly powerful platform. They need to put more concentrated effort in their communication strategy.
[21/21]
I’ll simply end with saying that the Fed has an incredibly powerful platform. They need to put more concentrated effort in their communication strategy.
[21/21]
