MNI BRIEF: Fed Scenarios May Not Offer Clarity, Officials Say

Three Federal Reserve officials said Tuesday a proposal for the FOMC to publish economic scenarios and reaction functions in a quarterly report may be confusing and difficult to accomplish practically. Former Fed Chair Ben Bernanke presented the idea at a Fed conference on its policymaking framework last week.    

The 19-member FOMC would have to agree on specific scenarios and potentially the probabilities attached to each, and that would be hard to do, said Fed presidents Mary Daly, Beth Hammack and Raphael Bostic in an Atlanta Fed panel in Amelia Island, Fla. Even if the FOMC published scenarios, the public "may not be able to process it, they may not be able to understand," Hammack said, adding, "But I'm open to ideas about how to be more transparent in our process."

"We want to make sure information is actually information and not add to the mix of things just floating around," Bostic said.  

Hammack said she is thinking about economic developments in terms of three scenarios: if tariffs are a one-time price level move, if tariffs are more persistently inflationary and if the Fed is challenged by both higher inflation and higher unemployment. (See: MNI INTERVIEW: Limits To Comms Benefits From Fed Scenarios)