MNI BRIEF: Fed's Musalem Proposes Changes To The SEP

U.S. central bankers' closely scrutinized quarterly “Summary of Economic Projections” should be changed to anonymously link participant's outlooks and keep the forecasts on a rolling basis, St. Louis Fed President Alberto Musalem said Wednesday. 

"I think the SEP is a valuable communications tool. I think it could be made more valuable in a few ways," he said in Q&E at an event at the Peterson Institute. "One, we ought to communicate that the SEP is not an output of the meeting," he said. It is "an input into the meeting. Most take it as an output though."

"Number two, I am in favor of connecting the dots, meaning in anonymous way, every meeting, and from meeting to meeting always anonymous," he said, meaning each participant's views on rates would be linked to their outlook for inflation, unemployment and growth. " In doing so, the market and households and businesses would be able to understand our reaction function better in terms of the different scenarios that different people have in mind for the economy." 

"Lastly, another tweak I would think useful for the SEP is right now it's calendar based," Musalem said. The projections "should be rolling horizons, so that when we get closer to the meetings towards the end of the year ... the SEP doesn't become all that important." (See: MNI BRIEF: Fed's Logan Suggests Changes To SEP, QE Comms)