Powell, Williams Rejected Shutdown Language at 2013 Fed Meeting
(Bloomberg) -- Federal Reserve Chairman Jerome Powell and New York Fed President John Williams were among policy makers who in 2013 urged against referring to a government shutdown in the central bank’s post-meeting statement, a stance that may have implications today.
Transcripts and briefing materials from 2013 Federal Open Market Committee meetings -- which were released Friday with the customary five-year lag -- showed that Fed staff had proposed leading the October 2013 statement with a sentence saying that month’s shutdown and data delays “have made the evolution of economic conditions during the intermeeting period somewhat more difficult to assess.”
While the minutes of the meeting released at the time did mention that officials considered and rejected a reference to the shutdown, the transcript shows who said what and how the debate played out.
Williams -- who was San Francisco Fed president at the time and spoke first during the discussion over the statement -- called for deleting that proposed line, saying it “puts too much emphasis on the role of the government shutdown, both in terms of the economic outlook and our own decision-making.” Speaking toward the end of the debate, Powell, a governor at the time, also urged leaving it out, without giving an explanation.
Finally, Ben Bernanke, the Fed chairman from 2006 to 2014, said that he personally didn’t think the sentence “is all that harmful. It does explain why this meeting has been sort of not, in some sense, as active a meeting as it otherwise would be.”
“But given the sense of the committee,” Bernanke proposed scrapping the reference to the shutdown.
Powell, who became chairman in February, said Thursday that the current partial-government shutdown that began Dec. 22 -- already lasting longer than the 2013 event -- is unlikely to leave a mark on the economy in the short term.
An extended shutdown, though, “would show up in the data pretty clearly,” and the Fed will have a “less clear” picture of growth without some key figures from the Commerce Department, he said.
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