William Poole: Fed Guy Sez, I Don’t Like Mondays

Maybe it’s just me, but there is something sort of bizarre about Federal Reserve board member William Poole’s dissent on last week’s rate cut, and then non-dissent on this week’s cut. In short, he dissented on the 75-basis-point cut, saying he wanted it to happen on the Fed’s regular schedule. And then he didn’t dissent on today’s 50-basis-point cut, even though the Fed had cut so much last week.

What are we to make of this? If Poole originally thought 125-basis points in cuts in a week was warranted, as he apparently does, based on today’s non-dissent, then he clearly thought the economy was in dire straits. But he didn’t want to make the cut last week, despite wanting 125-basis points in cuts.

Huh? Was he going to suggest that it all happen today, to stay on FOMC schedule? I doubt that. Was it that he liked 50 but not 75, but didn’t want to dissent twice in a row? That’s possible, but seems a little political, not to mention over-precise numerology.  It’s also inconsistent, given that he didn’t dissent on last summer’s out-of-cycle cut.

About the only thing I can come up with is that Poole’s just obsessive-compulsive about dates — maybe he doesn’t like Mondays — and there was no damn way he was going to go along with any cuts that day. The economy be damned.


  1. Mr. Kedrosky, Bill Poole wasn’t a voting member for today’s meeting. The new voting rotation starts at the first official meeting of the year so Poole, a voting member last year, got to vote at last week’s meeting. Also, Bill Poole wasn’t present at the summer meeting that led to the intermeeting move in the discount rate so he didn’t vote for or against it.
    (FWIW, Jim Cramer says Bill Poole is “SHAMELESS”– http://www.youtube.com/watch?v=SWksEJQEYVU)

  2. Ah, I had forgotten the voting member issue. On the other missed vote(s), let’s say that he picks his spots.

  3. Lineu Vargas says:

    Besides the issue of Mr. Poole not being a voting member this time around, a more general point to keep in mind about the FOMC is that its members don’t vote in the sense we understand vote: the number (or absence of) is more an indication of the committee’s general level of disagreement (or agreement) about the course of policy than the personal position of a particular FOMC member. I learned this from Lawrence Meyer’s “A term at the FED” (he was a FED governor some year ago).

  4. I think Steve has the perfect answer to your question. But I don’t think it would have been all that inconsistent for Poole to have voted in favor this time around. Rate cuts work their magic on the economy with a lag of months; a delay of eight days wouldn’t make a huge difference, and there is a case to be made for trying to cut only at regularly-scheduled meetings. (Don’t make it look like you’re panicking.)
    As for the 125bp issue, the key thing to remember is that the size of any cut is actually in the short term more important than the absolute Fed funds rate itself. NOT cutting at the regularly-scheduled meeting would also send an undesirable message of complacency, even if everybody knew that the markets got their 75bp present 8 days previously. Maybe if the 75bp cut had been explicitly spun as bringing the regularly-scheduled cut forward a week — but it wasn’t.
    (BTW, on a completely unrelated note, how do I get invited to Money:Tech? I’ve sent a few emails into the void, but have received no reply.)