Emergency at the Fed?

Mike Maloney released yesterday some interesting analysis of this week’s Federal Reserve activity and is hypothesising that something ominous may be occurring behind closed doors.

On Monday of this week, the Federal Reserve Board of Governors held an impromptu meeting using expedited (some use the vernacular “emergency”) procedures. The purpose was to discuss monetary policy. Thereafter, Chairwoman Yellen visited the President at the White House for another irregular meeting. Interestingly, both meetings were closed door in nature and passed largely under the mainstream media radar.

A google search of the Yellen-Obama meeting produces many largely identical articles containing what Mike refers to as “fluff”; meaning simply that they lack substances and convey only the simple idea that the two discussed the economy.

What the White House meeting overshadowed was the actual Federal Reserve Board of Governors meeting on the 11th, held under expedited procedures as indicated on the Fed’s website above. The purpose of that meeting was stipulated as being to review and determine advance and discount rates to be charged by the Federal Reserve Banks – or in other words, set monetary policy. The press always reports on these meetings. As indicated on the Federal Reserve’s website, this meeting was scheduled last Thursday, April 7th. Again however, an attempt to google this board meeting largely produces results about the White House meeting. Googling “Fed Governor Meeting” produces largely results about the April 6th Federal Reserve Board of Governors meeting and notably, more information about the White House meeting again. As a consequence, we do not know what was said at these meetings – in particular the board meeting of the 11th. One thing that is known however is that the invocation of “expedited procedures” is unusual.

Moving over to the White House website one can find a one paragraph press release pictured below. The release generically describes the Yellen-Obama meeting to be about “near and long-term growth outlook, the state of the labour market, inequality and potential risks to the economy” which seems to be the only information that the press has reported on.

Over at the Federal Reserve website again, we see the list of recent meetings pictured below which includes the April 11th meeting. What’s interesting is the fact that meetings are also scheduled for the 12th and 13th (today our time). This totals four meetings before reaching the half way point in the month which would imply a rate of eight meetings or more for this month; something that is highly unusual. Going back to January of 2015 there has been no precedence for this number of monthly meetings. 

Mike’s hypothesis is that the lack of media reporting, the large number of board meetings scheduled, the fact that the White House meeting has seemingly “hidden” at least one board meeting in terms of reporting and the fact that the only substance being provided is “fluff” from the White House press release page all points to the conclusion that something irregular is being discussed behind closed doors. Using the response to the Great Recession as an example, Mike suggests that reactions to crises are often determined in secret and announced later; a tendency that could be seen to fit the pattern of behaviour being observed this week.  It should be noted that Mike is not alone in observing this. An alert raised a few hours ago by Gregory Mannarino who we’ve quoted before has labelled this meeting behaviour as “unprecedented” and “emergency” in nature. He also observes the fact that the media is apparently under-reporting. The headlines will be interesting to observe as the week progresses.