Ellen Meade has worked on some of the thorniest issues facing the Federal Reserve system over her 25 year career at the Fed’s Board of Governors in Washington, alongside its top officials, and in academia at Duke University where she teaches and as Research Professor of Economics continues to examine the key issues facing the Fed today.
During two periods at the Fed in Washington D.C., from 1984 to 1994 and 1995 to 2021, Ellen served as a senior advisor in the Division of Monetary Affairs and as a special advisor to the Board of Governors. It was during her second episode there when her work overlapped with the Fed’s new Chairman, Kevin Warsh, who was on the Board of Governors from 2006 to 2011. From 2011 to 2021, her work focused on monetary policy and communications.
Which brings us to the Hoover Institution’s annual May meeting at Stanford University where Ellen joins me to look at the study Warsh was asked to do by the Bank of England in 2014, what his findings may mean for changes he wants to make in how the Fed conducts policy, in particular when it comes to how it communicates, as well as how it arrives at its policy decisions.
Kevin Warsh’s 2014 review for the Bank of England’s Monetary Policy Committee was part of a wider program of reforms aimed at improving the Bank’s transparency, accountability and governance. As fate would have it, these are issues the Fed has increasingly come to face now as critics have criticized it for overreach, mission creep, and a loss of focus.
Warsh’s study, “Transparency and the Bank of England’s Monetary Policy Committee,” recommended making the BOE’s MPC ( its counterpart to the Fed’s FOMC) more transparent while protecting candid internal debate. It urged publishing fuller minutes and, with a multi‑year delay, transcripts of the second day of MPC meetings, plus related disclosures for other committees and key inputs; the Bank accepted the recommendations and began publishing deferred transcripts and improved minutes.
It is Warsh’s focus on transcripts of the central bank’s policy meetings, why the first day’s transcripts should NOT be published but only the second, that Ellen is zeroing in on with me now. She explains why it was important to Warsh back in 2014, and how these same kinds of concerns may carry over to his vision of how the Fed should conduct and communicate its policy now.
Ellen starts with the 2014 BOE study. “One of the things that he talks about quite a lot parallels something that he’s been talking about for the Fed… which is this idea of free and open debate, the ability for people to share their views without worrying about whether those views are going to be misinterpreted by the public or go down in the public record, to maybe <impugn>, their reputations.”
In particular, Warsh then, and Ellen now, zero in on why the first day of a policy meeting should not be recorded.
”I think what we’re really talking about is whether they continue to record the first day of the meeting and it becomes part of the transcript or whether they just decide that they won’t publish transcripts of that anymore,” she says.
“They’ll have a part of the meeting that they meet in a sort of private way, right, for themselves, to help them have this family feud, but not in the public. In other words, no groupthink.”
At a time when so many aspects of Fed policy are under question, when its independence is in the spotlight from every angle, including here at Hoover where the theme of the conference is “Independence, Structure, and Risks Ahead for Central Banks,” Ellen sees seeds of future Warsh changes in the making.
”And so, he has some ideas in mind. Maybe those ideas are informed by the recommendations he made to the Bank of England. And so, I think it’s interesting to think, well, if he did want to use those ideas, how might they manifest themselves?”
So dive in and hear Ellen take a groundbreaking study Warsh did in 2014 for the BOE and examine why it could translate into a blueprint for key communications changes he may make now for a Fed that could be at some crossroads.
And why she’s not sure that the FOMC “family” isn’t already feuding “but if he’s convinced something’s broken…Kevin Warsh, then that’s a step he could take.”
Kevin Warsh’s advice to the BOE 00:01:35:21
Okay. So, in 2014, he was invited by the Bank of England to study there. Communications practices. They had a few specific questions they wanted him to look into and issue a report. And he did that. And that report, I think, is interesting. If you go back and read it. And of course, it’s only about the Bank of England.
It’s not about the Fed but it has relevance 00:01:56:14.
It’s not about the Fed. He compares the Bank of England’s current practices with other central banks. But, one of the things that he talks about quite a lot parallels something that he’s been talking about for the Fed. Okay, which is this idea of free and open debate of, the ability for people to share their views without worrying about whether those views are going to be misinterpreted by the public or go down in the public record, to maybe more, their reputations.
Family feud?? FF-FOMC? 00:02:29:22
And, you know, he has said recently that he would like I think he said this in his confirmation hearing. He would like the Fed meetings to be almost like a family feud. In other words, no groupthink and.
Warsh did give advice to the BOE…would he follow it here? 00:02:45:04
Exactly. And so, he has some ideas in mind. Maybe those ideas are informed by the recommendations he made to the Bank of England. And so, I think it’s interesting to think, well, if he did want to use those ideas, how might they manifest themselves?
Quest1: Publish transcripts? 00:03:10:16
So, one of the questions he was asked to look at for them was the question of whether they should publish transcripts, because they didn’t at that time. But the Fed had this history of publishing transcripts. And so, his recommendation was that they should publish transcripts, and they do. But they do now. But what he decided was they had a two-day meeting, too.
Two tier advice 00:03:33:02
They had a sort of day one where they review the economy, it’s like the economic go round that the FOMC has. And then a day two where they talk about monetary policy. And he said to them, “You know what you shouldn’t record day one anymore.” They were recording both days. They were making minutes. They weren’t making transcripts. But he said you should, you know, make sure the minutes are really a good summary of what took place on day one. But don’t record them because you don’t want to release transcripts of them that gives people the freedom to say whatever they want, even if it’s sort of a half formed judgment that they fear could be wrong, or that someone could say, oh, didn’t you realize, you know, that’s really a stupid idea.
Encourage freedom for an open discussion 00:04:18:20.
Give people a lot of freedom to be open with each other. Then on day two, when they come in to advocate for something, that’s when you record it. That’s what you want in the historical record. That’s the decision time. So that was very interesting. They did take on his recommendations. That is exactly what they did. And, you know, what would that look like right now?
Apply this to the FOMC 00:04:44:02
Both days of their policy meetings are recorded. Both days are part of the minutes. I would be stunned if he thought the minutes of the FOMC weren’t a pretty complete discussion, so I doubt he would recommend changing the way the minutes are written. But could he say to the committee it might help us, as a group, to talk about things?
Family Feuding means no littoral public release 00:05:24:21.
I think what we’re really talking about is whether they, continue to record the first day of the meeting and whether it becomes part of the transcript or whether they just decide that they won’t publish transcripts of that and anymore, they’ll have a part of the meeting that they meet in a sort of private way, right, for themselves, to help them have this family feud, but not in the public.
Current practice and timeline 00:06:24:18
Has a pretty good procedure for this five year<delay>. It’s actually at the end of five years. So, it’s at the beginning of year six. They release all the documents, the staff documents, all the meeting prep documents. A lot of, you know, the transcript, a lot of materials associated with the meeting for that year that they’re releasing them and they release a good, often staff memos that were background, you know, the FOMC was sent those memos ahead of the meeting. So, it’s quite a complete record for people who want to do historical analysis. I think what the Fed does and the timeline, you certainly wouldn’t want to shorten it. I think when the Fed made this decision to start releasing transcripts back in 1993. One of the main concerns was how much time do we need so that people don’t fear that coming out in the public domain?
US-UK different timelines 00:07:19:00
And they settled on five years. Now the Bank of England settled on something like 7 or 8 years, but still, it’s, you know, you want it to be substantial so that people aren’t thinking today when they’re talking, oh my God, someone is going to read this right away, right? Because it’ll become part of the historical record, but you don’t really want it to become part of any kind of political process or anything like that. So, I wouldn’t change that. I don’t even know. You know, I think, I was inspired when I read this 2014 report that, oh, this is something that could be implemented, you know, in the context of the FOMC, but do they need to implement it?
Prospects for change 00:08:02:19.
I’m not sure. I think at least when I left in 2021, the meetings were pretty wide ranging. Maybe it wasn’t a family feud directly. There were no plates of food being thrown or, you know, there was not a lot of interruption. People would speak and they would speak for a while, and then the next person would speak.
Is the ‘family’ already feuding? 00:08:22:05
But they often had points of view, and then they would continue to talk over a coffee break. And, you know, I’m not sure that the family isn’t already feuding. Right? I’m not sure something is broken, but if he’s convinced something’s broken…Kevin Warsh, then that’s a step he could take.
Some research shows transcript release had stilted discussions 00:08:58:17.
The research that’s looked at this to see, documents and meetings before that release has said that, and this is some of my own work, but some of people in political science who have looked at things like, how long did people speak? When did they freely interrupt each other? Shows that after the transcripts started being released, there was far less of that.
Times change, as do styles 00:09:20:15.
You know, people spoke for longer periods of time and in prepared remarks, and they didn’t interrupt each other. So that’s a different style of discourse, you know, does that mean that they weren’t having a debate? I’m not sure that it does. Have a debate with prepared statements. But, you know, if that’s a judgment that he has, you know, then maybe he thinks that’s a good idea. You’re in a learning process; when you’re learning, if you think, oh, it’s going to be in the public record, maybe I should be a little quiet at the beginning, which could certainly affect me. Right. So, I think this is one of these funny things that until you do it, you wouldn’t necessarily know.
Change will require a vote 00:10:16:17.
Yes. You know, it does it make a difference, or doesn’t it? But, you know, it’s something that I think, it would at least if he followed past practice, it would require them to have a show of hands. It probably not a formal vote, but a kind of a show of hands. Maybe it is important enough to have a formal vote.
There would be background work as well 00:10:34:21.
He would have to consult with Congress, I think, because he would be taking away a day. He would have to do some background work and get some work for those. But he seems to it in that document for the Bank of England, he’s already laid out all the arguments in favor of it.
BOE Vs Fed Different accountability 00:11:22:04
So well, the Bank of England members are individually accountable to the Parliament, which is very different from what, when Alan Greenspan was asked about this in testimony many years ago, he said, you know, it’s the FOMC that’s accountable to the Congress. And indeed, if you look at the Federal Reserve Act, it talks about the FOMC. It doesn’t end. It talks about the chair in the monetary policy report, which is actually issued by the board. So, it’s talking about the two bodies, the FOMC and the board. It’s not really talking about each individual member. So that is a structural difference between the Bank of England and the Federal Reserve. So, and I will say the statement gives the votes. So, if somebody dissents, you see it and you have a sentence in the statement that tells you why the person dissented, and you have a little bit of an explanation.
Warsh has a full agenda 00:12:30:10.
And I think he’s got a lot of things on his plate. Right. He needs to come in and, you know. Yes. Did he work with a number of staff who are still there? Yes, but it’s been a while. He needs to build up, a relationship with staff and other policymakers, and that’s reserve Bank presidents as well as board members.
Various issues and needs 00:12:49:22.
And probably his initial focus, I would bet, is on getting up to speed on where the internal dialog is on various issues and building that public trust. And then I think, you know, there are a lot of broader issues. You know what I’ve just named from this report because I thought it’s kind of interesting to see what that report suggests. But, you know, there are big issues around, say, how the Fed wants the FOMC to handle balance sheet policy QE at the zero lower bound. Does it want to issue a framework around that? How does it think about forward guidance? These are big issues that are still left relatively unaddressed. And I think he could well want to <memorialize> that as a committee process with memos and briefings and things could take a while.
Everything takes time 00:13:37:11.
But you know, I think that those kinds of things could be something he wants to undertake. But they wouldn’t end very rapidly. But, you know, over the course of the next 6 to 9 months.
A renewed Accord with Treasury? 00:14:04:23
It is a very complicated issue. Yes. But it probably is a priority, I think, given, you know, given if I look at his past remarks and you see Secretary Bessent talking about a renewed accord, and the accord probably deals with balance sheet topics, it’s my bad. I can’t imagine that it doesn’t. So, I think that would be something that’s probably high on his agenda. Well, I think there’s a whole the FOMC has a history of processes and is followed to investigate a certain issue. I think what they really need is some guidelines around how they plan to use QE in the future. You know, you could for instance, in a report that they might issue or some background work.
Vetting the past for lessons 00:14:52:22
They would say, look at issue of QE in the GFC and after and then in the pandemic and after, I think you’ve got very, very different situations and both of those. And then you could easily argue that there was too much QE after the pandemic. You had a lot more fiscal policy during the pandemic, which you didn’t have during the GFC.
Look back and learn 00:15:13:21.
I really think the Fed should not have been buying mortgages into a mortgage market that was, you know, a housing market that was booming. I think there are a lot of flaws in the way pandemic post-pandemic was implemented. And the FOMC needs to maybe put some parameters around them.
Ellen E Meade
Research Professor of Economics
Education
Ph.D., Princeton University (1988)B.A., Duke University (1979)
Overview
Ellen Meade joined the Economics Department at Duke as a Research Professor in July 2022. Previously, she spent 25 years at the Federal Reserve Board and 12 years in academia. Before leaving the Fed, she was a Special Adviser to the Fed Board of Governors and Vice Chair Richard Clarida as well as Senior Adviser in the Division of Monetary Affairs. From 2011-2021, she worked primarily on monetary policy and communications; she played a key role in the Federal Reserve’s new framework for monetary policy and the Fed Listens initiative in 2019 and 2020. From late 2021 until joining Duke, she advised private-sector financial institutions on the economic and policy outlook.
