Federal Reserve policymakers should put less emphasis publicly on the short-term outlook for interest rate increases and more on the economics driving monetary policy and the uncertainty of forecasts, Fed Governor Jerome Powell said on Wednesday.
In comments at a Brookings Institution forum on Fed communications, Powell said that a diverse set of views at the Fed, with 12 regional bankers and a Washington-based board who set their own public speaking schedules, helps strengthen the democratic framework of the central bank.
But he said the now frequent speeches by Fed officials have led to too much emphasis on the timing of the next rate increase, de-emphasized the primary influence of the Fed chief in setting policy, and underplayed the amount of uncertainty facing the central bank.
The Fed under its former chairman, Ben Bernanke, started putting more emphasis on public communications, but proliferation of speeches has led some to regard the central bank's approach as confusing.
"The public expression of our diverse views helps sustain public support for the Federal Reserve as a public institution," Powell said. But "it is wise not to read too much about the path of policy into all of this communication ... There is a single (Federal Open Market Committee) participant who has most of the leverage in our policy discussions. Observers would be well-advised to listen carefully to what she says."
Powell said that in his own remarks he planned to put more emphasis on economic conditions and uncertainty while downplaying short-term rate increase issues.
The Fed has an internal committee reviewing its communications strategy, including issues like whether to hold a press conference after every policy meeting instead of each quarter, whether to continue publishing quarterly economic projections, and whether to add confidence intervals around those forecasts. (Reporting by Howard Schneider; Editing by Paul Simao)