Question

# What is the policy directive, and who caries it out?

AND # What is the beige book, and why is it important to the FOMC?

Answer 1

#1

Policy directives are statements of and instructions for implementing important, high-level internal direction and positions that guide organization decisions and actions. The purpose of the Policy Directive is to communicate information about policies, procedures and processes relating to matters overseen by the Department of Administration and its divisions. Establishing written policy directives promotes accountability and consistency in management and practices.

A policy directive is established by the Fed and submitted to the Trading Desk. The manager of the Trading Desk must ensure that the directive is achieved.

#2

Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.

Thus, the Beige book is a consolidated report of regional economic conditions in each of the 12 districts. This book is sent to FOMC members before their meeting so that they are updated on regional conditions before they decide on monetary policy.