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News > Economy
Fed tight-lipped about leak
September 19, 1996: 10:00 a.m. ET

Wire service report of pressure to raise rates rocked bond market Tuesday
From Correspondent Allan Dodds Frank
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NEW YORK (CNNfn) -- At a recent Federal Reserve Board photo opportunity, there were no loose lips about interest rates. "Mum" was the word about a Reuters report that rocked bond markets Tuesday.
     Citing extraordinarily detailed information about the desire by the Fed's regional banks to raise interest rates by a quarter point or more, the report shocked veteran Fed watchers. Fed Vice Chairman Alice Rivlin called the leak "very distressing."
     "There is no question in my mind that if someone is discovered as having done it -- or someone confesses to having done it -- that their career at the Federal Reserve is terminated, said Wayne Angell, a former Fed governor who is now chief economist at Bear Stearns.
     "This is the highest kind of violation that a member of a central bank staff or board could ever have," he added.
     Angell said he had no doubt that the information was accurate, noting that he has no guesses which senior Federal Reserve official released the information.
     Another former Fed official discounted the possibility that the leak was a deliberate pre-election effort to avoid surprising the market with a rate increase next week.
     "They are very, very careful at the Fed about communications failures to make sure there are no inadvertent leaks," said Scott Pardee, senior advisor at Yamaichi Capital. "This was probably a human error."
     Although a Fed regional bank director was once criminally prosecuted for a leak, a Justice Department spokesman said he knows of no criminal violation in the new case. Others say the Fed's inspector general is sure to investigate further.Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.