Oct. 12 (Bloomberg) -- Federal Reserve Bank of Philadelphia President Charles Plosser said today that policy makers are struggling to decide how to improve transparency, and he doesn’t see them resolving the issue at next month’s meeting.
The Fed in Washington today released minutes of the Sept. 20-21 session, which shows most participants favored giving more information on the central bank’s goals and how they influence its decisions. Most “saw advantages” in tying the Fed’s near- zero interest rates to more-specific developments in the economy. Such changes may be expressed in ways other than the post-meeting statement, the Fed said.
Plosser, speaking to reporters in Philadelphia shortly after the minutes were released, said policy makers “haven’t agreed” on how to better articulate their goals, which is why the minutes didn’t specify what form additional communication would take.
“It’s us struggling with how we want to frame that discussion,” Plosser said.
He said the discussion isn’t likely to be resolved at the next Federal Open Market Committee meeting in November.
The Fed could make it clearer how its policies depend on inflation, inflation expectations and resource utilization, he said. Some Fed officials support incorporating the Taylor Rule, which measures where the policy interest rate should be set based on inflation and growth, he said.
“I’ve always been a proponent for many years of a more systematic approach to policy and making our reaction function clearer,” Plosser said. “There are various ways you can do that,” and “almost any way involves some sort of inflation objective.”
--Editors: Kevin Costelloe, Christopher Wellisz
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