Magazine article Regional Economist

Is the Fed out of Touch?

Magazine article Regional Economist

Is the Fed out of Touch?

Article excerpt

From time to time, the Federal Reserve is criticized for conducting monetary policy in an ivory tower. From high atop that tower, so the argument goes, the Fed enacts its policies, unaware of their effects on the nation's workers, consumers and businesses.

Unfortunately, this criticism reflects a fundamental misunderstanding of the Fed's decentralized structure and the opportunities it affords us to stay in touch with regional concerns. As president of the St. Louis Fed, for example, I spend almost a fourth of my time talking with and listening to various constituencies in the Eighth Federal Reserve District. Other Bank staff spend time in similar endeavors. Our contacts are far-ranging, including:

* Boards of Directors--All four District offices have a board of directors, drawn from a broad cross-section of the public, as well as the banking community, in our seven-state area. Meetings are monthly.

* Economic Advisory Council--We meet twice a year with members of this 10- to 12-member group to discuss the economic concerns of small business and agriculture.

* District Dialogues--Four or five times a year, we host road shows for

bankers, rotating among 18 cities. Two senior officers and I speak before each group, take questions and continue the discussion over dinner. The following morning, we host a similar meeting for community leaders.

* Beige Book contacts--Eight times a year, just prior to Federal Open Market Committee (FOMC) meetings, we check in with dozens of District contacts in a wide range of industries for late-breaking trends in their businesses. …

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