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November/December 1996, 
Vol. 78, No. 6
Posted 1996-11-01

Does the Fed's New Policy of Immediate Disclosure Affect the Market?

At its February 1994 meeting, the Federal Open Market Committee broke a long-standing practice by immediately announcing its decision to increase the degree of pressure in reserve markets. Previously, the Fed had argued that immediate disclosure of policy decisions would create an announcement effect and would increase financial market uncertainty and volatility. The author analyzes the market’s reaction to the Fed’s new policy and finds that immediate disclosure neither created an announcement effect nor increased market uncertainty, as the Fed had once feared.