Statement by Thomas M. Hoenig, President, Federal Reserve Bank of Kansas City, before the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, October 19, 1993.

My name is Thomas M. Hoenig, and I am president of the Federal Reserve Bank of Kansas City. This Bank serves the Tenth Federal Reserve District, which includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming, the northern half of New Mexico, and the western third of Missouri. I am pleased to have the opportunity to express my views on the disclosure of information from Federal Open Market Committee (FOMC) meetings.

The Federal Reserve must be accountable for its actions and has an obligation to disclose as much information as possible about its deliberations and decisions, subject to maintaining the highest possible level of policy effectiveness. It is my belief that the Federal Reserve's current disclosure policies achieve these ends.

The current policies provide a detailed accounting of FOMC deliberations and decisions. The minutes of FOMC meetings are comprehensive. They document the information considered during a meeting and the decision of each voting member. Moreover, the minutes provide the rationale for the majority's decision and include statements filed by members who dissent from the majority. In addition, the Federal Reserve reports regularly and frequently to the Congress, ensuring further that we are accountable for our monetary policy actions.

Current procedures foster an environment of open and candid discussion among the members of the FOMC. Valuable information from a variety of sources is brought to the discussion, and some of it is provided with the understanding that it be kept confidential. The give and take among members provides an opportunity to clarify issues and allows the FOMC to synthesize a range of views. Any proposals that would impair this deliberative process, given current procedures that ensure accountability, would compromise the quality and effectiveness of Federal Reserve monetary policy.

Current procedures, in my opinion, also strike an effective balance between timely disclosure and the need for flexibility in the conduct of monetary policy. These procedures, which provide for the release of the minutes shortly after the subsequent meeting, allow the FOMC to respond flexibly to various contingencies over the intermeeting period. Earlier release of the minutes would restrict this flexibility and could have the unintended effect of contributing to market volatility.

With regard to the three specific questions posed to me in Chairman Gonzalez's letter of September 24, 1993, my answers are as follows: First, I make brief notes for my personal use during FOMC meetings. Our Bank's research director also occasionally takes notes. These notes are kept in locked files, as is other confidential FOMC material. Second, I have observed other participants taking notes during FOMC meetings, but I have no knowledge of their content or disposition. Third, I have no information about the release of information by anyone employed at the Federal Reserve about FOMC meetings before the official release of that information by the Federal Reserve.

In closing, let me reiterate that I believe the FOMC must be accountable for its actions, and I believe that its current disclosure policies are appropriate and effective in achieving this end. They provide the public with comprehensive information about the FOMC's decisions and deliberative process, and they enhance the Federal Reserve's ability to pursue the nation's objectives of economic growth and price stability.