The presidents of the Federal Reserve’s 12 regional banks usually talk a lot, creating what some consider a cacophony of dissenting voices but what others see as valuable nuance in deciphering trends in policymakers’ thinking.
Not so much right now. The resignation of two of the leaders is under something of a cloud because of stock trading has led to an uncharacteristic low profile among members of the Federal Open Market Committee. For one thing, there are only 10 presidents left to give speeches.
One who is willing to speak—San Francisco Fed chief Mary Daly—is putting the emphasis on trust, which is precisely the quality that has taken a hit.
“Trust is our most important tool,” Daly told Marketplace’s Kai Ryssdal. “If we don’t have the people’s trust, then nothing we do will matter.”
Just to make sure people get the point, Daly rubs it in:
“People have to know that we’re doing our work for them, not for our own profits, so this has been a very disappointing couple of weeks.”
Members of the board of governors have also been relatively quiet. Fed Vice Chairman Richard Clarida has come under scrutiny for shifting millions worth of mutual funds from bonds to stocks last year just as the Fed was embarking on a massive stimulus to support the stock market.
Governor Lael Brainard, however, is not so shy. At the very least, Brainard is likely to become vice chairman for supervision after Randall Quarles’ term ends this month. There is also some momentum for her to take Chairman Jerome Powell’s place as progressives step up their attacks on his regulatory policies and the ethics controversy clouds his record.
Brainard weighed in on how the Fed will be calling banks to account on climate risk, a topic that fits in with either role. Not only will the Fed incorporate climate risks into its stress tests, but it will steer banks in directions the central bank wants them to go.
According to Brainard last week:
“Ultimately, I anticipate it will be helpful to provide supervisory guidance for large banking institutions in their efforts to appropriately measure, monitor, and manage material climate-related risks, following the lead of a number of other countries.”
Low Key Is Key; Waiting On Biden's Chair Choice
Otherwise, FOMC members are speaking on low-key topics. Cleveland’s Loretta Mester, for instance, took part in a cybersecurity conference and Atlanta’s Raphael Bostic was scheduled to talk on rural economics in Georgia. Others will participate in various events in October that don’t target monetary policy.
Analysts expect the FOMC to proceed with an announcement at the early November meeting about reducing its bond purchases even though the September jobs report barely fulfilled the threshold set by Powell for a “decent” report. Only a disappointing 194,000 jobs were added, but the August number was revised upwards and that could happen with September, too.
San Francisco’s Daly popped up on Face the Nation to comment it was too soon to say the job market is “stalling.”
“It's going to have these ups and downs, especially with the Delta variant,” she said. “I always expected Delta to take a toll, just not put us into another recession, and we're seeing that toll.”
But basically, everyone is waiting for the White House to pull the trigger on Fed appointments, and especially who will be chairman for the next four years. There is also one open seat on the seven-member board of governors and at least two departures over the next few months, and maybe a third if Powell is not reappointed.
The White House, of course, is preoccupied getting its spending bills through Congress. The administration got a temporary reprieve on the debt ceiling, but Republicans are digging in on any further cooperation and two Senate Democrats are resisting the proposed trillions in spending.
So it may be sometime before Fed announcements are forthcoming. Or it may be this week, who knows?