Fed policy statement lag

August 17, 2009

The Fed and Treasury are extending the Term Asset-Backed Securities Loan Facility into next year, which is no surprise since the asset-backed securities market and its cousin, the commercial mortgage-backed securities market, are still struggling.  The question for me, though, is why doesn’t the Fed make these announcements when it’s issuing its FOMC statement.

The same thing happened in June. The FOMC releases this statement, and the next day it announces it will tweak a number of its extraordinary measures, deciding to extend some while letting others die a natural death.

Is it because like a resume, the Fed doesn’t want the FOMC statement on monetary policy to go over one page? Or is because they simply are trying to keep a clear delineation between rates and credit easing and the multitude of lending facilities that the Fed is running.

I vote for a nice chart, an appendix to the policy statements maybe, so it’s easy to see what they’re keeping and what they’re ditching.  It would make it easier to track policy and would make their announcements seem less random.

UPDATE: Reuters colleague Kristina Cooke notes that there’s a technical reason for keeping them separate. The Fed lending facilities are authorized under 13 (3) of the Federal Reserve Act, making tweaks to them a Board, not a FOMC, decision.

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