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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And the same could be said, with knobs on, for the Fed minutes.

26 pages, in small dense type (html) or 2 column (pdf and difficult on the screen) in a grammar style that must date to the early 50s.

Now that the world likes to get access to source material, perhaps they might like to join in the fun too.

1 page with emoticons as bullet points might be somewhat radical, but one would hope that one could catch my drift, to use a vulgar expression, whatho chaps !!

Posted by kmitchelson | Report as abusive

I think that you kind of missed the mark reading this press release, and although I consider myself pretty good at reading fedspeak, I don’t think I had to go into translator mode for this. The Fed didn’t really bury the lede so much as put the reassuring news first. That second paragraph that you say contains “precisely zero news” is vital to this release. The Fed wants to say that by changing the discount rate, we’re not making any moves on the FFR, and our outlook hasn’t changed. That’s a really important signal to send because the discount rate and the FFR usually move in lock-step.

Also, the headline isn’t “WE RAISED THE DISCOUNT RATE, JSYK” because they did more than that. They say “the changes to the discount window facilities include…” because they not only changed the rate of the primary facility, they changed the duration of the primary facility and changed the rate and put an end date on the term-auction facility.

Posted by sohlmac | Report as abusive

My all time favorite Greenspan quote: “I’m trying to figure out how to put fewer ideas into more words.”

Posted by AndrewBW | Report as abusive

The announcement looks like it was a summarized version of the blow by blow account of the meeting. They first talked about and approved some modifications, talk about why, and then they finally agree on the rate.

The ordering of items had nothing to do with what was most important. Maybe the meeting stenographer also drafted the announcement?

Posted by rogueecon | Report as abusive

Felix….Maybe you can tell the Reuter editor’s to quit using the infamous “But,Better Than Expected” newspeak while you’re at it.

Posted by KirkD | Report as abusive

What gives you the idea we are moving away from Fed speak nonsense? We have coddled these over paid idiots for years as they introduced theory after theory that were designed mainly to transfer wealth from the tax payers to Goldman Sachs.

Bernake is guilty of fraud as is Geithner and Paulson, until we bring the criminals to justice instead of hanging on every lie they tell.

Posted by jstaf | Report as abusive