The Federal Reserve Board must announce its monetary policy decisions at once, rather than waiting 30 days as it does now, a three-judge federal appeals court has ruled.
The Federal Reserve Board has strongly resisted releasing the results of the deliberations of its Federal Open Market Committee after the committee's monthly-meeting, arguing that such disclosure will give market speculators an unfair advantage.
A spokesman for the central bank said the Federal Reserve Board plans to ask the Justice Department to appeal the decision to the Supreme Court.
Otherwise, the appeals court ruling is due to take effect Dec. 1.
The central bank's most important monetary policy steps are carried out under the direction of the Federal Open Market Committee.
The committee meets in Washington each month and tells the Fed's open market desk in New York how to buy and sell government securities in order to influence the growth of the money supply during the next four weeks.
The committee is composed of the 7 members of the Federal Reserve's Board of Governors and 5 of the 12 presidents of the Federal Reserve district banks.
The three-judge court, with U.S. Circuit Court Judge Carl McGowan writing the opinion, upheld a District Court ruling that the Open Market Committee's directive is not exempt from the Freedom of Information Act.
The nation's central bank has been under pressure for years to reduce the lag between the issuance of its monetary policy directive to the New York manager of the open market account and its release to the public.
Minutes of the Open Market Committee meeting used to be made available with a 90-day delay. The Fed shortened that to 45 days and more recently to 30 days.
In addition, the chairman of the Board of Governors, now Arthur F. Burns, must testify before Congress each quarter and outline the central bank's goals for the growth of the money supply - narrowly defined as checking accounts and currency in circulation - and other monetary aggregates, as they are called.
But the Fed argues that if the results are announced immediately, market participants who follow day-to-day developments will have an advantage over other citizens who do not.
Fed critics say that as soon as the Fed enters the market to buy or sell securities, well-trained market participants can discern the central bank's policies and actually have a greater advantage than they would if the agency spelled out its policies in advance for everyone.
The Fed responds that market participants often guess wrong at the Fed's monetary policy intentions.
The Fed argues that release of its domestic policy directive should be deferred to make it easier to carry out policy, to avoid disruptions in the market and to hold down the cost's of open market moves.