JPMorgan: The FOMC Meeting Minutes - FJElite

Today’s scheduled release of the minutes to the June 16-17 FOMC meeting will be the first minutes in the Warsh era of diminished communications. The revamp of the last post-meeting statement raises the specter of a similar revamp to the minutes. This is a risk, but we see a few factors that could limit how much change we can expect to see. The background to the minutes is an important place to start. After the 1966 Freedom of Information Act. the Committee decided that a lagged publication of meeting minutes would appropriately align with the spirit of that law. Similarly. Fed chairs from Bernanke onward have emphasized that an important rationale for transparent Fed communications is democratic accountability. Even if Warsh is not similarly minded, the minutes are produced with significant input from the committee.

The first draft of the minutes is prepared by the statt'. In a strict legal sense, the Board staff report to the Board collectively, and likewise the FOMC staff report to the Committee as a whole. It is only by tradition that the Chair may have special influence on staff documents. For the minutes, the staff's first draft is then distributed to committee meeting participants for several rounds of edits to incorporate their comments. The final version is subject to a notation vote, which is reported in the minutes, and which has always been unanimous. Encouraging more dissent on policy decisions (“family fights") is not particularly controversial in monetary policy circles. By contrast, notation votes are meant to be simple administrative matters to move forward ordinary busmess, and dissents there would be a sign of a dysfunctional family. So. the path toward less informative minutes would start with the chair, with the committee's acquiescence, directing the staff to omit important points of discussion in the policy deliberation. Then in the editing process, committee participants would have to be OK with it just enough that they don't dissent. We don't expect material format changes tomorrow, but the risks clearly tilt toward less transparency in Fed communications.