Unauthorized Disclosure of the Federal Reserve's Monetary Policy Decision

GGD-84-40: Published: Feb 3, 1984. Publicly Released: Feb 3, 1984.

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In response to a congressional request, GAO investigated the unauthorized disclosure of the Federal Reserve System's (FRS) midyear policy report to Congress which contained a decision concerning the long-range monetary growth targets which represent FRS plans for the expansion of the Nation's money supply and affect the cost of money as determined by interest rates. Advance knowledge of this information would enable financial traders to capitalize on the expected price changes.

GAO was unable to determine how and when the information leak occurred. Because monetary target decisions are made through consultation and reported to Congress, there is broad access to information on the target decision before its public dissemination. GAO found that at least 239 persons in FRS or Congress knew of the decision or handled documents containing the decision. Knowledge of the decision could have come from documents containing the decision or could have been orally transmitted. Although a financial publication possessed the leaked information the day before public disclosure, GAO could not establish that it was the original recipient of the information or when the leak occurred. GAO believes that safeguarding procedures at both FRS and Congress could be improved and has suggested some actions that might be taken to help prevent another leak. However, revised procedures and stricter compliance with those procedures will do little to deter an individual who has access to and is intent on divulging sensitive data to unauthorized persons.

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