Friday, February 13, 2009

FOMC: Adding employment or folly?

The Federal Open Market Committee (FOMC), the Federal Reserve group that sets interest rates added to it work hours today.

The FOMC has eight remaining meetings this year. Four were one-day meetings and the other four were two-day affairs. Today the FOMC announced that all eight will be two-day meetings. The extension will allow members additional discussion time. From a pure policy standpoint, this extra discussion may yield little, as short-term interest rates are already zero and the FOMC has made clear it will not raise them soon.

Yet the FOMC is greatly changed since last year. Tim Geithner left his post at the FRBNY to go to Treasury. He has been replaced by new FRBNY President William Dudley.
Also at the start of each year Presidents of the regional Fed banks filter in and out of the FOMC. This year Chicago, Richmond, Atlanta, and San Francisco all serve. If the extended meetings increase the appearance of hard-working and unified Fed, they may be worthwhile.

No comments: