The Fed could be confusing the public with its many voices

Federal Reserve Chair Janet Yellen said Tuesday that one of the challenges for the central bank is usually how its multiple people communicate with the public.

“This really is one of the challenges of our bodies,” Yellen told a European Central Bank panel in Frankfurt.

“We have an extremely large committee, 19 people,” she said. “We’ve possessed a sort of democratization of monetary policy that began seriously under my predecessor.”

The discussion panel – which also featured central bank chiefs from Japan, the U.K. and the euro area – focused about how central banks communicate with the general public and the marketplaces about what they are doing to ensure price stability. Yellen said that each speeches from committee people, mainly before an insurance plan decision meeting, can be a hurdle for the Federal government Reserve.

“Individuals should be explaining in their speeches, elaborating what’s about the (Fed’s decision) assertion and explaining what we’ve agreed upon. We agreed that having done that, individuals can venture out and explain their specific perspectives,” she said.

However, she added: “I would say that guidance was not totally faithfully followed, although some of my colleagues do try to do this, and the press tends to pick up on differences, (which is) specifically difficult whenever we have an upcoming policy decision.”

Some people are traditionally more hawkish than others, and they could recommend with their speeches a more robust path to normalization of monetary plan, and vice-versa, creating potentially incorrect anticipations for traders, who trade according to the path of monetary plan.

Yellen admitted that it is hard to look for a solution to the problem.

“Probably we will never, given our framework and size, manage to handle this totally effectively,” Yellen told the audience.

“That is a work in progress,” she added.

The Federal government Reserve is expected to increase interest rates next month. In October, moments from the bank’s previous policy meeting showed that officials noticed the U.S. overall economy expanding at a reliable pace, which increases the chances of another rate hike before the end of the entire year.

Earlier this month, President Donald Trump selected Fed Governor Jerome Powell to achieve success Yellen when her term at the helm expires in February.

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