WASHINGTON — The Federal Reserve will hold meetings this fall to discuss potential changes to its communications practices.
Fed Chair Jerome Powell said the Federal Open Market Committee began laying the groundwork for its communications review during its meeting on Wednesday, adding that the group had previously discussed "high level" changes, including those around its quarterly summary of economic projections, or SEP.
Powell said the conversation was positive and produced several ideas for potential reforms. He said the committee will be briefed by its staff ahead of public meetings later this year. But, he noted, that any changes ultimately made to the Fed's communications tools and practices will be modest and require "very broad support" from the group.
"You want to be really careful, because I think our communications are pretty well received and not broken. So, more is not necessarily more, but better is better," he said. "So we're going to be looking at ways to do things that will improve the clarity of what we do for the benefit of the public."
The Fed had previously announced that it would review its communications policies as part of its broader monetary policy framework review, which occurs every five years. During Wednesday's post-FOMC meeting press conference, Powell said the communications part of the review will begin once the Fed finalizes its new policy statement on longer run goals this summer.
Earlier this month, Fed Gov. Christopher Waller said he would be
Staff cuts
Powell also addressed staff reduction during the press conference. Asked if his statement earlier this year about the Fed being "overworked maybe, not overstaffed" was contradicted by the Fed's recently launched buyout offer, he said the two were not in tension.
Powell said the Fed had been growing its staff by roughly 1% annually for many years. He said the recent effort to "right-size" the central bank's workforce is an effort to be "careful stewards of public resources." But he maintained that the employees do work long and hard hours.
He also said that the Fed periodically carries out these types of buyout exercises to ensure its funds are being used effectively.
"We're doing a careful scrub of the Board and all the Reserve Banks, and we're going to find 10% of employees who can do something else, where we can streamline our operations," he said. "We think we can get there in a year, in a couple of years, we think we can do that."
Economic data
Meanwhile, Powell said he is concerned by reports that Congress is considering substantial funding cuts for agencies that collect and publish economic data.
He noted that the data produced by those agencies — including readings on inflation and employment — amount to a "huge public good" that not only benefits the Fed but also other arms of the government, businesses and the broader public.
"We can do our jobs, I'm not concerned that we can't do our jobs — that's not the point," Powell said. "The point is, we're really starting to see layoffs, and important gatherers of data are saying they'll have to cut back on the size of their surveys — that's going to lead to more volatility in the surveys. I think we should take a step back and, from our standpoint — and from the standpoint of business and government and everyone — having really good data on the state of the economy at any one time — is a huge public good."
Powell also noted that the lost data gathering capabilities would be a blow to the U.S. in an area in which it has been a global leader.
"The United States has been a leader for many years in this whole project of measuring and understanding what's happening in our very large and dynamic economy, and I hate to see us cutting back on that," Powell said. "I would want to keep investing in that for the good of the general public."
On Wednesday, several former top bank regulators also
"Eliminating the OFR and crippling FSOC would not reduce the federal budget deficit but would undermine America's capacity to maintain a stable financial system," they wrote.
Still no departure date
Powell was once
"I'm not thinking about that. I'm thinking about this," Powell said, pointing to his notes from this week's FOMC meeting.
The question comes as Powell continues to face mounting criticism from President Donald Trump over the FOMC's refusal to raise interest rates.
In a lengthy tirade at a press event ahead of the meeting decision announcement, Trump blasted Powell as a "stupid person" who is "costing the country a fortune." He dismissed the notion that the Fed was holding rates steady over genuine inflation concerns, insisting that it was a matter of the Fed chair's personal feelings toward the commander in chief.
"I don't even think he's that political," Trump said. "I think he hates me, but that's OK."
Powell said the decision to keep the target range for the federal funds rate between 4.25% and 4.5% was made because of lingering uncertainty about the economic impact of various significant policy changes regarding trade, immigration, regulation and government spending.
He said the political bluster from Trump and his allies played no role in the Fed's decision-making process.
"From my standpoint, it's not complicated. What everyone on the FOMC wants is a good, solid American economy with a strong labor market and price stability. That's what we want. I think our policy is positioned right now to deliver that and to be able to respond in a timely way as the data leads around," he said. "We think we're in a good place to respond to significant economic developments. That's what matters. That is what matters to us."
