Did the Fed 'massage' December minutes?

The Federal Reserve’s recent market-easing message is raising concerns over whether the December minutes had been “massaged.”

“As a Fed chair, as somebody who came from the private sector, who understood how business was done, [Federal Chairman Jerome Powell] had not previously let the Fed minutes be doctored,” former Dallas Fed adviser Danielle DiMartino Booth told FOX Business’ Lauren Simonetti on “FBN: AM” on Thursday. “It was fairly apparent given yesterday’s minutes release that they were definitely massaged, modified, call it what you will, after the fact.”

During its December meeting, the Fed signaled that it would take a more relaxed approach to interest rate hikes in 2019. The minutes followed Powell’s comments last week that the Fed would be more “flexible” on policy, depending on the economy. 

In the past, monetary policy was strictly based on austerity, but, in Booth’s opinion, investors have become too familiar with a Federal Reserve that “placates” the markets when stocks decline.

“Investors of this generation, they don’t have any recollection of pre-[Alan] Greenspan days when monetary policy was simply made to reflect the situation in the economy,” she said.  “That is no longer the case.”

It had appeared that Powell would not follow in his predecessor’s footsteps, she added, but his actions have shown otherwise.

“I think that a lot of people were hoping that Jay Powell was going to break the mold of ... predecessors and not kowtow, not placate investors,” she said. “But he’s clearly shown that that is not the path that he’s going to do. He does appear now to be a [Janet] Yellen and a [Ben] Bernanke type of clone.”

Booth said Powell has changed his stance four times, leaving investors guessing.

“What’s hard for investors though is, ‘What is he going to say today?’” she said. “He was hawkish in October. He was dovish in November. He was hawkish in December. And he was dovish in January.”


According to Booth, the Fed also changed its message in the 2008 transcripts.

“Transcripts are released with a 5-year lag," she said. "Janet Yellen actually said if the markets do not like the message that was conveyed in the FOMC statement, then we can use the minutes as any other tool in our toolbox. It’s a matter of public record that she said that.”

Powell is expected to reiterate his message from last week during an interview on Thursday with the Economic Club of Washington’s David Rubenstein.

In Booth’s opinion, Powell has lost credibility.