Federal Reserve Board research finds 1960s and 1970s discount rate press releases signaled policy stance before regular FOMC statements

In a research note, the Federal Reserve Board examines Board press releases on discount rate changes from January 1960 to July 1974 and concludes that they often served as real-time monetary policy communications before the modern era of regular Federal Open Market Committee postmeeting statements. The paper argues that these releases were made public shortly after discount rate decisions, frequently explained the economic rationale for policy moves, and were understood by policymakers and markets as guidance on the stance of monetary policy. The analysis shows that early 1960 announcements were terse, but later releases increasingly linked discount rate changes to policy goals such as price stability, restraining inflation pressures, managing money and credit growth, supporting economic stability, addressing balance of payments pressures, and supporting the USD. Just over half of the discount rate announcements in the sample referred to economic policy goals. The note also says the language in these Board releases often mirrored discussions at FOMC meetings, and that officials explicitly considered their "announcement effect" on markets. As a key example, it highlights the December 1968 discount rate increase, whose accompanying statement described a "policy of restraint" to reduce inflationary pressures. With Regulation Q ceilings left unchanged at the same time, Treasury yields rose by as much as 40 basis points over the following four trading days.