Do Federal Reserve Bank presidents’ interest rate votes in the FOMC follow an electoral cycle?

ABSTRACT

We find that Federal Reserve Bank presidents’ regional bias in their dissenting interest rate votes in the Federal Open Market Committee follows an electoral cycle. Presidents put more weight on their district’s economic environment during the year prior to their (re-)election relative to nonelection years.

KEYWORDS:

• FOMC voting
• electoral cycle
• Federal Reserve Bank presidents

JEL CLASSIFICATION:

• E52
• E58
• D72

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Alternative drivers of dissenting votes include different consensus building capabilities of the chairman (El-Shagi and Jung 2015), career characteristics (Chappell, Havrilesky, and McGregor 1995; Harris, Levine, and Spencer 2011) or the nature of the meeting (Meade and Sheets 2005).

² These results are mainly driven by dissents in favour of monetary tightening. 86% of all dissents cast by Bank presidents are in favour of monetary tightening, while only 14% are in favour of monetary easing.