Adventures in Fedspeak

By Felix Salmon
February 18, 2010
news of the moment is that the Fed has raised the discount rate to 0.75%. So why does the headline announcing the fact read like this?

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The news of the moment is that the Fed has raised the discount rate to 0.75%. So why does the headline announcing the fact read like this?

Federal Reserve approves modifications to the terms of its discount window lending programs

The first two paragraphs of the press release contain precisely zero news; and in fact it’s not until the very end of the release that it actually talks in English about “the increase in the discount rate”. The actual news is announced like this:

The changes to the discount window facilities include Board approval of requests by the boards of directors of the 12 Federal Reserve Banks to increase the primary credit rate (generally referred to as the discount rate) from 1/2 percent to 3/4 percent. This action is effective on February 19.

What purpose is served by this obfuscation? Why can’t central banks in general, and the Federal Reserve in particular, communicate in English? Alan Greenspan famously said in 1988 that “if I turn out to be particularly clear, you’ve probably misunderstood what I said” — but that was then, and I thought we were moving away from that kind of silliness.

Ben Bernanke has shown that clarity is a virtue; his underlings in charge of drafting announcements should have gotten the message by now, instead of reworking it into incomprehensible gobbledygook.

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