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I've been reading about the Federal Open Market Committee's announcements of monetary policy decisions, specifically the time at which the announcements are made and then how the markets somewhat immediately respond. However, FOMC announcements are a relatively recent thing, as they appear to have only started regularly in ~95 or so (press conferences are even more recent). It seems like from 1996-2013 they made an announcement after the end of every meeting at 2:15, and from 2013-present they changed it to 2:00 for some reason.

What about before 1994/5 though? How did the public learn of the monetary policy changes, and how soon after the FOMC meetings did a majority of people learn what the policy changes, if any, were?

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  • $\begingroup$ There were different regimes ahead of 1994. Interest rates were regulated in the immediate post-WWII era. Regulations were loosened, particularly in the 1970s. There was a flirtation with monetary base targeting, and people watched money numbers. Once they gave up on monetary base targeting, procedures evolved towards the 1994 system. In other words, there's multiple answers. $\endgroup$ – Brian Romanchuk May 22 '17 at 20:58
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The operating procedures for the Federal Reserve have changed drastically over the years. For example, interest rates were pegged during the early post-war era. Later on, the Volcker Fed attempted to target money supply growth, and "Fed Watchers" scoured the money data. (I do not have any references for this earlier history.)

Once money supply targeting was abandoned, operating procedures were roughly similar to the situation after 1994. The Dallas Fed has discussions of Fed Communications (written by Mark A. wynne) that has a brief summary of this period.

During that era, reserves paid no interest. The Fed did open market operationa to add/subtract reserves to match the demand for required reserves; the Fed Funds rate is the "price" banks were willing to pay to borrow reserves. If they supplied too much reserves, the Fed Funds reserves would drop towards 0%; supply too little, and banks would pay a lot to meet reserve requirements. The open market desk attempted to estimate the demand for reserves, and calibrate the size of the operations based on the market fed funds rate.

From the other side, banks could see the operations undertaken by the open market desk. They tried to reverse engineer the Fed's reserve supply function, so that they could tell what the target was (and of course, they could observe the market rate on Fed Funds).

As a result, banks roughly could tell what the target was. They would then adjust the prime rate on loans. I believe that "the public" would find out as a result of banks announcing changes to their prime rates, although presumably investors with a particular interest in interest rates would be watching what was happening in the money markets (which would adjust more rapidly).

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