The government closely guards potentially market-moving data until its release time. So it was a surprise Wednesday morning when the Federal Reserve announced that it had inadvertently transmitted the minutes from its latest policy-setting meeting to a distribution list on Tuesday, nearly 24 hours ahead of schedule.
The Fed didn’t realize its error until early Wednesday. It then decided to release the minutes at 9 a.m., five hours before the scheduled release time. “The reason is, they were inadvertently sent early to a list of individuals who normally receive the minutes by e-mail shortly after their normal release time. The individuals on the distribution list—primarily congressional employees and employees of trade organizations—received the minutes shortly after 2 p.m. Tuesday,” a Fed spokesman said in a statement.
The Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Fed’s inspector general will look into whether any trading occurred on the early information. It’s not yet clear when they plan to finish their investigation.
The central bank's mistake sheds light on the perils of controlling information in the digital age. Different departments approach the problem with different procedures. At the Labor Department, for example, reporters are placed in a specially equipped lockup room in advance of the release of the monthly employment report. They have 30 minutes before the rest of the world to analyze and write about the data. The journalists can’t send it anywhere, though—their computers and phone lines are connected to a central switch controlled by Labor Department staff, which isn’t activated until precisely 8:30 a.m. “Today, fractions of a second can equate to millions or even billions of dollars in market movements,” Carl Fillichio, senior adviser for communications and public affairs at the Labor Department, told lawmakers in testimony about the department's procedures last June.
The Washington Post recently outlined the “decidedly low-tech” means of announcing Fed policy:
When the Fed announced its “QE2” program of bond purchases in November 2010, here’s what actually happened: The Fed’s press office faxed the announcement over to a Dow Jones reporter’s fax machine in the press room in the basement of the Treasury Department, where the fax was photocopied and distributed to all the reporters present. They had 10 minutes to write their stories before Treasury staffer Sandra Salstrom rang a bell to indicate they were free to distribute the news across the world. In one step toward modernity, by then she used her BlackBerry to count down the time, not, as it had been previously, a cartoon wristwatch. There is some substantive reason for the odd procedure; Treasury staff do not themselves handle or distribute the announcement, instead leaving it to reporters themselves, lest there be an appearance that the Fed’s independence was undermined.
The Fed minutes do not in and of themselves contain new policy announcements, although they do give the public a glimpse of the discussions taking place at the central bank and are scoured for hints of how Fed policy might be conducted in the future. In this case, the contents of the March 19-20 Fed minutes were consistent with what Fed officials have been saying in public appearances: Members of the Fed’s policy-setting committee remain divided over when the central bank should pull back from its open-ended, $85 billion a month bond-buying program, although "many" thought it could be appropriate to slow the pace of purchases "at some point over the next several meetings" if the labor market continued to improve. That was before the latest disappointing jobs report was released, though.
The central bank's policy-setting committee will next convene a two-day meeting on April 30 and May 1.