Loretta Mester, the President of the Cleveland Federal Reserve, has suggested that Federal Reserve policy statements could be improved with more detailed explanations of economic assessments and their impact on the central bank’s outlook.

What Happened: Mester, who is due to retire next month, criticized the brevity of Federal Reserve policy statements under the leadership of Chair Jerome Powell, Reuters reported on Tuesday. During a conference at the Bank of Japan in Tokyo, she argued that these condensed statements can be problematic for policy-making in an uncertain economy.

“Short statements suffer from what I call a ‘Hotel California’ problem: We are reluctant to change particular words because of the possible signal that doing so may send,” she said, referencing the hit 1970s song by the Eagles.

“Words ‘check in’ but it is hard to get them to ‘check out’ even when it is desirable.”

Mester suggested that detailed passages describing economic developments and their influence on the central bank’s outlook could enhance Federal Reserve policy statements.

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Mester also proposed the introduction of an “anonymized matrix” of economic and policy projections alongside the Summary of Economic Projections (SEP) published each quarter. This would allow market participants to see the correlation between each participant's outlook and their view of appropriate monetary policy associated with that outlook.

Why It Matters: Mester’s recommendations come in anticipation of a planned monetary policy framework review that Powell has announced will commence later this year and likely continue into 2025. She expects that the Fed will consider its communication strategy as part of this review.

Earlier this month, the Federal Reserve adopted a cautious stance on inflation, with Powell signaling a preference for rate cuts over hikes. However, the Fed minutes released later in the month raised the risk of “higher-for-longer” interest rates.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari