(Bloomberg View) — In recent years, the Federal Reserve has tried to increase transparency in its communications with the public. Officials have added press conferences to their meetings four times a year, published a summary of economic projections for the years ahead, and publish “dot plots,” which are forecasts for the federal funds target rate made by all members of the Federal Open Market Committee.
Despite all this disclosure, there’s one uncertainty surrounding the Fed that it can’t communicate its way out of: its membership. Of the 12 positions eligible to vote in FOMC meetings in 2018, as few as five members are in their seats today. How much can the public know about the institution’s thinking, when the makeup of the institution itself is mostly unknown?
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First, of course, blame Senate gridlock. Seven of the 12 voting members of the FOMC are the members of the Board of Governors, who are nominated by the president of the U.S. and confirmed by the Senate. Yet the Senate hasn’t confirmed any members of the board since June 2014, when Lael Brainard was confirmed and Jerome Powell was re-appointed. President Obama made nominations to fill the two vacancies that existed late in his second term, but like that of Merrick Garland to the Supreme Court, those nominations died in the Senate.
Another vacancy was created this week when Daniel Tarullo formally stepped down after announcing he would do so earlier this year. The Board of Governors now has only four of its seven members in place, and President Donald Trump has yet to make any nominations.
The remaining five voting members of the FOMC are presidents of regional Fed banks, but in an unusual circumstance, two of those five voting members are not yet in their positions. The first is the incoming president of the Atlanta Fed, Raphael Bostic, who takes his post in June. Although he was an economist for the Fed from 1995 to 2001, his main research focus is on housing and urban development. He has given no speeches on monetary policy, and we have no idea what he thinks about the current state of affairs. The second unknown 2018 voter is the president of the Richmond Fed, which now is vacant following the surprise resignation by Jeffrey Lacker this week.