MODIFICATIONS TO THE DISCLOSURE PROCEDURES OF THE FEDERAL OPEN MARKET COMMITTEE.

The Federal Open Market Committee (FOMC) announced on January 19, 2000, that it approved modifications to its disclosure procedures at its December 21 meeting.

These modifications, which will take effect as of the February FOMC meeting, are designed to enhance communication to the public. They are summarized here and described in more detail in the accompanying attachment.(1)

First, the Committee determined that a statement will be issued to the public immediately after every FOMC meeting. The previously stated procedure was to release a statement only in the event of a policy action or a major shift in the Committee's view about prospective developments.

Second, the FOMC changed its language describing its assessment of future developments. This new language will describe the FOMC's consensus about the balance of risks to the attainment of its long-run goals of price stability and sustainable economic growth and will be used in the announcement made after each meeting. More specifically, the announcement will indicate how the Committee assesses the risks of heightened inflation pressures or economic weakness in the foreseeable future. This time frame in the new language is intended to cover an interval extending beyond the next FOMC meeting.

Under its prior procedures, which will no longer be used, the FOMC's view about the period ahead (referred to as the "policy tilt" or "policy bias") was couched in terms of the relative chances of an increase or decrease in the intended federal funds rate. The "bias" language voted on by the Committee explicitly referenced the intermeeting period.

The revised disclosure procedures were proposed by the "Working Group on the Directive and Disclosure Policy," which was formed in August 1999 and chaired by Federal Reserve Board Vice Chairman Roger W. Ferguson, Jr. The Working Group also included the following FOMC members: Governors Edward W. Kelley, Jr., Laurence H. Meyer, and Edward M. Gramlich and Federal Reserve Bank Presidents Robert T. Parry (San Francisco), Michael H. Moskow (Chicago), and William Poole (St. Louis).

(1.) The attachment is available on the Board's web site (www.federalreserve.gov/boarddocs/press/General/2000) and on request from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551.