US Federal Reserve leaves holes through which statements could leak

26 October 2013Finance

Simone Foxman, writing for Quartz:

When journalists get early access to US Federal Reserve statements, the system has flaws that make it easy to see how the information could get out early. That’s what may have happened last week with the Fed’s surprise decision not to taper its bond-buying program. The news started to move markets at the very millisecond of its official release, earlier than should have been possible.

[…]

Reporters are not required to surrender their cellphones, and they can bring computers into the room and connect to the internet before the release. The journalists are supposed to use their own systems to transmit the news at 2 p.m. and not a moment before, but there’s little to stop an early transmission.

The lack of controls around these economically significant releases is surprising. Why doesn’t the Fed simply release their statements at a pre-defined time on their website – the procedure the Bank of Canada follows – to ensure everyone has the information at precisely the same time? Yes, it might take news organizations several minutes to analyze the release before communicating it to their viewers, but those who are concerned with getting the release as soon as possible could access the information directly instead of relying on an intermediary to transmit it.