When Do FOMC Voting Rights Affect Monetary Policy? / Vyacheslav Fos, Nancy R. Xu.

Format:

Book

Author/Creator:

Fos, Vyacheslav.

Contributor:

Xu, Nancy R.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w33762.

NBER working paper series no. w33762

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2025.

Summary:

Using 472 FOMC meetings (1969-2019) and the exogenous rotation of voting rights among Reserve Bank presidents, we identify meetings where local economic conditions in voting districts significantly affect the Federal funds target rate (FFR), while those in non-voting districts show no effect. This voting-group effect persists after controlling for national conditions and Greenbook forecasts, implying that actual FFR decisions plausibly deviated from what average information and expectations would have suggested. Distortions are sizable, persistent, and priced into futures and Treasury markets prior to FOMC meetings. We demonstrate these findings using both components of the Fed's dual mandate: inflation and unemployment rates.

Notes:

May 2025.

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