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THE
R OA D M A P
AND THE
D E S T I N AT
I
O
WO R DS A
N:
SAM

O N E TA R Y
POLICY T
OOL
2014 A

NNUAL R
EPORT
FEDERAL
RESERVE
BANK
OF
MINNEAP
OLIS

2014 ANNUAL REPORT • FEDERAL RESERVE BANK OF MINNEAPOLIS
PRESIDENT’S MESSAGE

3

THE ROADMAP AND THE D EST INAT IO N:
WORDS AS A MONETARY PO LICY TO O L

5

MESSAGE FROM
THE FIRST VIC E PRESIDE NT

28

COMMU NITY DEPOSITORY INST IT U T IO NS
ADVISORY COU NC IL

34

TWIN C ITIES ADVISORY CO U NC IL

35

GREAT LAKES ADVISORY CO U NC IL

36

GREAT PLAINS ADVISORY CO U NC IL

37

MINNEAPOLIS BOARD OF D IR EC TO R S

38

HELENA BRANC H BOARD O F D IR EC TO R S

39

SENIOR MANAGEMENT

40

OFFIC ERS

41
THE REGION
FEDERAL RESERVE BANK OF MINNEAPOLIS
PO BOX 291
MINNEAPOLIS MN 55480-0291
EMAIL: LETTERS@MPLS.FED.ORG
WEB: MINNEAPOLISFED.ORG

EXECUTIVE EDITOR: KEI-MU YI
SENIOR EDITOR: DAVID FETTIG
EDITOR: DOUGLAS CLEMENT
MANAGING EDITOR: JENNI SCHOPPERS
DESIGNER: MARK SHAFER
COVER PHOTO: JOE PACZKOWSKI

The Region i s p ub l i s he d by the Federa l Reser ve B a n k of M in n ea polis.
The v i ews ex p re ss e d he re a re not n ecessa r ily th ose of th e Federa l Reser ve B a n k of M in n ea polis
o r t he Fe d e ra l Re s e rve Syste m . A r ticles may be repr inted if th e sou rce is credited a n d th e
P ub l i c Af fa i rs D e p a rt me nt o f t h e M in n ea polis Fed is provided with copies.
Pe rmi ss i o n to p ho to co py i s unrestr icted.
Vo l um e 2 9 N umb e r 1 , I SS N 1 045 –3369
M ay 2 01 5

1

ACKERMAN+GRUBER PHOTOGRAPHY

PR ES I D ENT ’ S MESSAGE
The Federal Open Market Committee has placed communication about the evolution of monetary policy at center stage in recent years, during which the federal funds rate has been near
zero. However, good communication is a key part of effective monetary policy even in more
normal times with a higher federal funds rate.
This year’s Annual Report essay is about one way that the FOMC could improve its communication about monetary policy. Most of the public conversation about monetary policy in
the United States focuses on the question, “What’s going to happen to interest rates at the next
few meetings?” Indeed, the Committee’s own communication often has this focus. But interest rates are only a tool or instrument for the FOMC to achieve its congressionally mandated
objectives of price stability and maximum employment.
The essay argues that the FOMC could be more effective if its communications about policy
were more focused on the Committee’s macroeconomic objectives, and how its policy choices
are specifically designed to facilitate the achievement of those objectives. This kind of goalbased communication would provide more clarity to households and firms about the future
evolution of the economy, and help stabilize the economy against adverse shocks.
The art and science of monetary policymaking are continuously evolving as policymakers
learn from research and from historical experience. As policymakers, we have learned a lot
about communication in the past few years. I believe this year’s essay is an outstanding example of a way forward for FOMC communication that builds on both research and historical
experience.

Narayana Kocherlakota
President
Federal Reserve Bank of Minneapolis

3

NIEDORF VISUALS

THE
R OA D M A P
AND THE
D E S T I N AT
I
O
WO R DS A
N:
SAM

O N E TA R Y
POLICY T
OOL
SAM SCHU
L H O F E R -W
SENIOR V
OHL
ICE PRES
I

D I R EC TO

DENT AN
D
R OF RES
EARCH

FEDERAL
RESERVE
BANK
OF MINNE
APOLIS

PUBLIC UNCERTAINTY ABOUT THE
ULTIMATE ECONOMIC DESTINATION CAN HINDER POLICYMAKERS’ EFFORTS TO ACHIEVE
THEIR GOALS. COMMUNICATING THE DESTINATION, THEREFORE, IS JUST AS IMPORTANT AS
COMMUNICATING THE ROADMAP.

PUBLIC UNCERTAINTY ABOUT THE
ULTIMATE ECONOMIC DESTINATION CAN
HINDER POLICYMAKERS’ EFFORTS TO ACHIEVE THEIR
GOALS. COMMUNICATING THE DESTINATION, THEREFORE,
IS JUST AS IMPORTANT AS COMMUNICATING
THE ROADMAP.

The Region

INTRODUC T IO N

T

he traditional monetary policy tool of central banks is interest rates. Central
bankers move short-term interest rates up and down to influence the economy. But with the federal funds rate—the Federal Reserve System’s main policy

rate—stuck at its effective lower bound since late 2008, the Fed has relied on two less
traditional tools: communication and asset purchases.
The Federal Reserve is no longer actively adding to its assets, but communication remains an active component of monetary policy (see Box 1 on page 8). Communications
in recent years from the Federal Open Market Committee (FOMC), the Fed’s primary
policymaking body, have focused largely, though not entirely, on the Committee’s expectations for the future course of interest rates and asset purchases.
I argue in this essay that this communications approach has been useful, but is incomplete. Describing the likely future path of policy—the roadmap, if you will—is clearly helpful
in steering the economy. If families and businesses have a clear idea how interest rates will
evolve, for example, they will find it easier to make long-term decisions. But unless policymakers also communicate clearly about the economic goals they aim to achieve—the destination—communications about the likely policy path alone leave the public more uncertain
than it needs to be.
How much employment should people expect at different dates in the future? How much
inflation? The answers to these questions are crucial information for consumers deciding how
much to spend and for businesses deciding how much to invest and how many workers to
hire. But a roadmap for policy tools does not provide these answers. In turn, public uncertainty about the ultimate economic destination can hinder policymakers’ efforts to achieve
their goals. Communicating the destination, therefore, is just as important as communicating
the roadmap.1
Of course, policymakers cannot perfectly forecast the future, so they cannot promise that
a certain inflation rate or level of unemployment will be achieved in a particular year. Nonetheless, they can say what they are trying to accomplish. If all goes according to plan, in what
year do they intend to bring inflation back to the FOMC’s 2 percent target? What labor market
conditions do they expect will prevail at that time?

The author thanks Cristina Arellano, Doug Clement, Ron Feldman, Jonathan Heathcote, Narayana Kocherlakota,
Richard Todd, and Kei-Mu Yi for helpful discussions and suggestions.

J O E PACZ KOWSK I P H OTO G RAP H Y

7

The Region

BOX 1

MORE TO SAY
Words are a more intensively used monetary policy tool than ever before. As
this figure shows, the FOMC’s post-meeting policy statements are longer than
at any time since the first statement was issued in 1994.

1000
F
FF
F F
F
F F
F
F
F
F
F
F
F
FF

900
800
700

WORD COUNT

600

F
F

F
FF

F
F
F F
F F
FF
F
F F
F F F F F FF
FF
F FFFF
F
F
F

500
400

F
F
F
F
FF
F
F
F F
F
FF F
F F
F FF
F
F
F
F
FF F F
F F FF
F
FF F
FF FFF
F
FFF
F
F
F
F
F
F
F
F
F
F
F
FFF F
F F
F
F
F
F
F
F
F
F
F
FFF
F
FF
F
F FF F
F
F
F
F

300
200

F
F
FF
100 F
0

F

F

F

FF

F

F

F
F
FFFFFF
FFFFFF
FF
FFFFF
FF
FFFFFF F
FF

1994

1996

1998

2000

2002

2004

2006

2008

Source: Author’s calculations; FOMC statements from federalreserve.gov

8

2010

2012

2014

The Region

The situation is like that of a bus company issuing a schedule for trips from Minneapolis
to Chicago. The company must provide at least a basic roadmap—we’ll stop in Rochester and
Madison—so passengers know where they can board the bus. But the company cannot commit to an exact map—to drive through downtown on a particular avenue—because traffic jams
or construction projects might force the driver to choose a somewhat different route.
What passengers really want to know, though, is that the bus is heading to Chicago and will
arrive there at roughly such-and-such a time. And although this, too, is something the company can’t forecast perfectly, it can say something simple that answers the passengers’ question:
We aim to get this bus to Chicago by 9 p.m.
Similarly, central bank policymakers will be most effective if they communicate clearly not
only what they intend to do, but what they intend to achieve—the destination as well as the path.
The essay proceeds as follows. I begin by reviewing the basics of how communication about
roadmaps and destinations can help achieve monetary policy goals. I then discuss how the
FOMC has communicated in recent years. Next, I show how lessons learned from research
and from the Fed’s recent experience demonstrate the importance of communicating about a
policy destination. I conclude by describing ways that Federal Reserve communications might
be improved. Views expressed here are my own, and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
An underlying assumption of this essay is that clear communication is a basic obligation of
democratic policymakers. From this perspective, the question is not whether to communicate
transparently, but rather how best to be transparent.2 I therefore do not explore whether nontransparent communications strategies might achieve better outcomes.3

HOW M O NETA RY POL I CY COM M U NI C ATI ONS I NF LU E NC E
T H E ECO NO M Y
The purpose of monetary policy communications is to explain the central bank’s actions to
households and businesses, so that they can understand the policy choices being made on
their behalf and can therefore form accurate, fully informed expectations about these choices.
In fact, as Federal Reserve Board Chair Janet Yellen has emphasized, all monetary policy tools
work in large part by influencing expectations.4 For example, a change in the federal funds rate,
which is an interest rate on overnight loans, has an impact mainly because a change in today’s
rate alters household and business expectations about the path of rates well into the future.
Even if the Fed did not communicate at all, its actions alone might influence expectations because the public could learn from patterns in the Fed’s historical behavior. But communication
enhances policymakers’ ability to move expectations—especially, though not only, in unusual
times that have little historical precedent.5
Monetary policy tools must operate by influencing expectations because most economic
decisions are medium- and long-term ones. The goals of monetary policy in the United States,

9

TH E PURPOS E OF MO NETARY PO LICY
COMMUN IC ATIONS IS TO EXPLAIN T HE
C E N TRA L BA N K’ S ACT IO NS TO HO USEHO LDS
A N D B US IN E SS ES, SO T HAT T HEY CAN UND ERSTA N D TH E POLICY CHO ICES BEING MAD E O N
TH E IR B E H A L F AND CAN T HEREFO RE FO RM
ACC URATE , FULLY INFO RMED EXPECTAT IO NS
A B OUT TH E S E CHO ICES.

10

The Region

established by Congress, are the Federal Reserve’s “dual mandate”: maximum employment and
stable prices. Monetary policy helps achieve these goals by affecting people’s demand for goods
and services and by influencing how businesses set prices and wages, hire workers, and make
capital investments. But decisions about buying goods and services, setting prices and wages,
and making capital investments have long-term impacts, so households and businesses tend
to base these decisions on their expectations for the future. A family that expects its income to
grow may buy a larger house. A company will give its workers a larger annual raise if it expects
demand for its products to rise at a healthy clip in the next year. Likewise, if the company is
considering whether to expand, it will be more confident in doing so if it expects persistently
high demand for its products.
Expectations about the future are subject to uncertainty, because many different shocks can
hit the economy. Monetary policy communications must account in some way for this uncertainty. In particular, policymakers cannot give a complete roadmap for their future actions—a
fixed time path of interest rates, for example—because they will need to make adjustments in
response to shocks. If inflationary shocks hit, the Committee may need to raise the path of
interest rates. If demand falls, the Committee may need to lower the path of interest rates. A
policy path that will achieve good results in one possible future will be undesirable in other
possible futures.
At the same time, because so many shocks are possible, there is no way for policymakers
to lay out a contingent plan for responding to every conceivable shock. At its Aug. 21, 2001,
meeting, the FOMC could not have contemplated that the United States would come under
terrorist attack within three weeks—let alone developed and announced a contingent plan for
a monetary policy response to such an attack. But a terrorist attack did come, and on Sept. 17,
the Committee responded by reducing the federal funds rate. Should that monetary policy action be interpreted as an entirely random event? Or was there a way for the public to anticipate
it—to know, even before the tragedy of Sept. 11, that the Federal Reserve would respond appropriately if an unanticipated bad shock were to arrive?
In many theoretical economic models, monetary policymakers have no need to communicate to solve this problem. The public is assumed to know policymakers’ goals and rationally
expects policymakers to act as appropriate to achieve those goals—whatever shocks may come.
Thus, in these models, families and firms can put themselves in the shoes of policymakers,
work out what choices the policymakers will make in any conceivable future, and thereby
know the entire contingent plan, even though policymakers never announce it.
In practice, however, making policymakers’ goals sufficiently clear so that the public can
anticipate how the Fed would respond to shocks is exactly the difficulty. The Federal Reserve
Act lays out a dual mandate for monetary policy, but does not define maximum employment
or stable prices. It was not until 2012, some 35 years after Congress passed the dual mandate,
that the FOMC, in a “Statement on Longer-Run Goals and Monetary Policy Strategy,” gave
a quantitative interpretation to price stability: a 2 percent inflation rate. But even then, the

J O E PACZ KOWSK I P H OTO G RAP H Y

11

POL ICY NEEDS TO REACT APPRO PRIAT ELY
TO S HO CKS, AND T HE CERTAINTY T HAT
POL ICYMAKERS SHO ULD PROVID E IS ABOUT
TH E NAT URE O F T HAT REACT IO N. GIVEN
TH E VAST VARIETY O F POSSIBLE SHO CKS ,
COMM UNICAT ING ABO UT T HE D ESIRED
DE STINAT IO N IS AN EF F ICIENT WAY
TO E XPLAIN HOW PO LICY WILL REACT.

12

The Region

FOMC did not say how far or how long it would allow the economy to deviate from that target,
and it added that it could not provide a fixed quantitative goal for employment. So the public
must work hard to infer what policymakers are trying to achieve and, hence, how they are
likely to act.
The public’s lack of complete information about policymakers’ goals means that if policymakers communicate only about their planned actions, about their roadmap, they force the
public to guess how they will react to shocks that the plan does not contemplate. By contrast,
if policymakers also make clear the destination they are trying to reach—acknowledging, of
course, that some shocks may prevent reaching it—then the public can better infer how policy
will respond to any shock.
Why care whether the public knows how policy will respond to shocks? First, conveying
this knowledge is how policymakers move expectations and hence influence the economy.
Second, if the FOMC is to achieve the goal of maximum employment, it must avoid creating
unnecessary drags on economic activity. Uncertainty about how the FOMC itself will behave is
one such drag, because households and firms will typically act more cautiously—saving more
and spending and investing less—if they have more doubts about the future. Importantly, the
best way to provide certainty about policy is not to establish a fixed policy that will not respond
to shocks. Such a policy would be certain, but it would be certainly inappropriate. Policy needs
to react appropriately to shocks, and the certainty that policymakers should provide is about
the nature of that reaction. Given the vast variety of possible shocks, communicating about the
desired destination is an efficient way to explain how policy will react.

T HE F ED ERA L R ES E RV E ROA DM A PS A ND TH E I R PI T FA L L S
The FOMC continually emphasizes in its statements and its members’ other communications that
its policies depend on how the economy evolves. This data dependence, though crucial for effective policymaking, can be challenging to communicate: How can the FOMC concisely explain its
potential reaction to each of the many shocks that might hit? The FOMC’s recent response to that
challenge has been to focus instead on the likely path of its policy instruments. This communications strategy is clearly helpful for financial market participants, who can have billions of dollars
riding on whether interest rates will change in June or September. But it is of limited benefit in
helping ordinary households and businesses understand where the economy is headed.
Box 2 highlights the FOMC’s recent communications about its plans, often referred to as “forward guidance.” Some examples are “calendar-based”; they talk about deploying interest rates or
asset purchases for a particular period of time. Other examples are “state-based”; they talk about
deploying interest rates or asset purchases until a particular state of the economy occurs, such as
a 6.5 percent unemployment rate. Relative to calendar-based guidance, state-based guidance can
give a better sense of the data-dependence of the Fed’s policies—at least to the extent that the Fed
clearly communicates this guidance, and the public correctly interprets it.

J O E PACZ KOWSK I P H OTO G RAP H Y

13

The Region

BOX 2

THE FOMC’S FORWARD GUIDANCE SINCE THE CRISIS
• DECEMBER 2008: The FOMC establishes a federal funds rate target of 0 to 25
basis points and says it “anticipates that weak economic conditions are likely
to warrant exceptionally low levels of the federal funds rate for some time.”
Later statements extend that horizon to “an extended period” and then to
specified dates of mid-2013, late 2014, and ultimately mid-2015.
• MARCH 2009, NOVEMBER 2010, SEPTEMBER 2011, AND JUNE 2012: The FOMC
announces programs to buy specified quantities of assets over specified
time periods.
• SEPTEMBER 2012: The FOMC says it will buy $40 billion per month of
mortgage-backed securities until the outlook for the labor market improves
substantially “in a context of price stability.”
• DECEMBER 2012: The FOMC stops forecasting a time period when exceptionally
low interest rates will remain appropriate. Instead, it says it will keep the funds
rate target at 0 to 25 basis points at least as long as unemployment exceeds 6.5
percent, assuming inflation remains under control.
• DECEMBER 2013: The FOMC slows asset purchases and says it will likely reduce
them in “further measured steps” if incoming data match expectations.
• MARCH 2014: As unemployment nears the 6.5 percent threshold, the FOMC
describes a “wide range of information” that will influence its decisions and
says it anticipates that low interest rates will likely remain appropriate for
a “considerable time” after the end of asset purchases.

14

The Region

For economists and financial analysts well-versed in Fed-speak, it may even be possible to
read between the lines and infer how the FOMC will behave in different scenarios. But these
forecasts do not really tell families and businesses what to expect for the variables that matter most to their decisions—variables like prices, wages, the chance of finding a job, the likely
demand for their products. In other words, both calendar-based and state-based forward guidance emphasize the roadmap for policy tools—not the economic destination.
One pitfall of providing a policy map without a clear destination is that the public may misinterpret a midway stop as the ultimate destination. In December 2012, when the FOMC said
it would keep interest rates effectively at 0 percent at least until the unemployment rate reached
6.5 percent, this unemployment number was intended merely as a threshold—a line that had
to be crossed before the Committee would even consider raising rates.6 But some FOMC participants voiced concerns that the public would mistakenly view the 6.5 percent number as
a trigger that would result in automatic rate increases.7 The two interpretations, threshold or
trigger, imply significantly different economic destinations: If 6.5 percent unemployment is a
trigger for rate increases, the FOMC must not be aiming for unemployment much below 6.5
percent, while if 6.5 percent unemployment is just a threshold for considering rate increases,
the goal could be a much lower unemployment rate. The difference between those destinations
could matter greatly for households and businesses. Should they plan to live in an economy
with a long-run unemployment rate of 6.5 percent, or an economy with much less unemployment? By making the 6.5 percent number prominent in its communications without saying
anything in its policy statements about its actual goal, the FOMC ran the risk that the public
would mistake 6.5 percent for the goal and form expectations predicated on that mistake.
Another pitfall of omitting the destination is that the public can come to question what the
destination is. That uncertainty, in turn, could lead to bad economic outcomes. Consider, for
example, a situation in which inflation has run below the FOMC’s 2 percent goal for several
years. What will happen if the FOMC reacts to this situation by announcing that it will keep
nominal interest rates low for a long time?8 The conventional prediction is that this policy
roadmap for low interest rates will cause households and businesses to borrow and spend,
stimulating the economy and raising inflation back to the 2 percent goal.
But another outcome is also possible. In the long run, nominal interest rates tend to be lower when inflation is lower. The public could interpret the policy roadmap for low interest rates
as an admission by the FOMC that inflation is not going to rise back to the 2 percent target.
If households and businesses interpret the FOMC’s announcement that way, they will expect
lower inflation in the future—and those low expectations, in themselves, will lead to further
downward pressure on inflation, fulfilling the expectation that inflation will remain below target. So although the low-rates policy can lead to a destination of 2 percent inflation, it can also
lead to a destination of much lower inflation.9 Making clear which destination is desired can
help coordinate the public’s expectations and avoid an unintended outcome.

15

T HE I MPO RTA NCE O F T H E DE STI NAT I ON
There are two major exceptions to the FOMC’s recent focus on roadmaps. These exceptions—
as well as the research literature—show both the benefits of providing a destination and the
importance of explaining that destination clearly.
The first exception is the January 2012 announcement that price stability means a 2 percent
inflation rate. This announcement freed the public from the need to guess what inflation rate
the FOMC is aiming for. It plays a crucial role in anchoring inflation expectations at 2 percent
even as realized inflation data continue to run below that target. But at the same time, it is far
from being a complete destination. As the Federal Reserve Bank of Minneapolis’ president,
Narayana Kocherlakota, has said, the public needs to know not only what inflation rate the
Fed is aiming for, but how quickly the Fed aims to get there—the benchmark time horizon for
achieving this goal.10 Households and businesses will make different decisions if they expect
inflation to creep back to 2 percent over a decade than if they expect the target to be attained
next year. What price increases should firms plan on this year? How good a deal is a five-year
car loan at a 3 percent interest rate? The answers depend on how quickly inflation returns to
the FOMC’s target.
The second exception is the expanded asset purchase program that the FOMC began in September 2012. In launching that program, the Committee said: “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases … and employ its
other policy tools as appropriate until such improvement is achieved in a context of price stability.” The program thus involved not only a roadmap, buying assets at a pace of $85 billion per
month, but also a destination: a substantially improved outlook for the labor market.
Still, this destination was not very precise. What indicators would represent substantial
improvement in the labor market outlook? How rapidly does the FOMC intend to reach that
goal? When the FOMC began to give more specifics, financial markets reacted sharply. In a
June 19, 2013, press conference, then-Chairman Ben Bernanke said the Committee anticipated
it would be appropriate to slow its asset purchases later that year if the labor market, economic
growth, and inflation continued to improve in line with the FOMC’s expectations. Over that
and the next four trading days, the yield on 10-year Treasury bonds jumped by four-tenths of
a percentage point, one of a series of financial market jolts in spring 2013 that have come to be
known as the “taper tantrum.” Market participants appeared to view the rising long-term interest rates as likely to reduce economic growth. In other words, markets viewed the announcement as revealing that the FOMC had changed the economic destination. But policymakers
evidently did not intend this negative reaction—Governor Jerome Powell said that “market
expectations began to lose touch with Committee intentions”11—and subsequently sought to
persuade the country that they had not changed plans.
Some have viewed the taper tantrum episode as demonstrating that state-dependent for-

16

The Region

ward guidance and communications about the destination of monetary policy lead to undesirable volatility in interest rates and, by extension, the economy as a whole. I take the opposite
lesson. The mismatch between public and FOMC expectations happened because the Committee described the destination only vaguely; markets became volatile when the Committee
surprised the public with its choice of a more precise destination.
It is as if a bus left New York with an announcement that it was headed for the West Coast,
the passengers expected to go to San Francisco, but when the bus got to Salt Lake City, the
driver turned a bit south and drove to Los Angeles. Of course the passengers would be surprised. If the destination had been clear from the outset—for example, if the FOMC had said
in September 2012 that it would use its tools as appropriate to bring unemployment down to
7 percent within a year while moving inflation closer to the 2 percent target—much confusion
could have been avoided.
Academic research on central bank communications, while not entirely agreed on all
points, largely supports the importance of credible signaling about goals as well as strategies,
and the high costs of not communicating about goals.
• THE VALUE OF COMMUNICATING A GOAL
Orphanides and Williams (2004) investigate what happens if people do not know
the central bank’s inflation target. They find that this imperfect knowledge causes
the central bank to respond more sharply to deviations from the target; in essence,
pushing inflation closer to the target than the central bank would normally desire
helps the private sector learn the target. But this policy approach is costly, because
the central bank must focus more on inflation stabilization, and less on output stabilization, than it ideally would. If the central bank could communicate its target to
the private sector, outcomes would be better.
• THE IMPORTANCE OF CREDIBILITY
In a recent paper, Hachem and Wu (2014) offer a stark example of the importance of
credibility. They model a central bank whose only tool is its ability to talk about its
destination—in particular, an inflation target. They find that the central bank cannot
announce an inflation target that is too far from the current inflation rate: If it does
so, the target will be badly missed, which will cause the public to stop paying attention to the target announcements and ignore the central bank forevermore.
• Much research on policy communications focuses on whether policymakers can
credibly promise to follow policies they may later wish to change.12 Campbell et al.
(2012) distinguish between two types of forward guidance: Delphic guidance, in
which the central bank predicts how the economy will evolve and how policy will

17

The Region

IF THE DESTINATION HAD BEEN CLEAR
FROM THE OUTSET—FOR EXAMPLE, IF THE
FOMC HAD SAID IN SEPTEMBER 2012 THAT
IT WOULD USE ITS TOOLS AS APPROPRIATE
TO BRING UNEMPLOYMENT DOWN TO 7
PERCENT WITHIN A YEAR WHILE MOVING
INFLATION CLOSER TO THE 2 PERCENT
TARGET—MUCH CONFUSION COULD HAVE
BEEN AVOIDED.

18

The Region

likely respond to that evolution, and Odyssean guidance, which commits the central
bank to some future action that it may later wish it did not have to take.13 They
argue that Odyssean forward guidance is powerful because a central bank that can
commit to providing future stimulus can thereby stimulate the economy today. But
the question of commitment is distinct from the focus of this essay. Even if a central
bank cannot hold itself to promises of future actions, it can still explain its goals.

STRENGTHENING THE FEDERAL RESERVE’S COMMUNICATIONS
How might the FOMC convey its destination and not just its roadmap? One approach would
be to add more details to the statement on longer-run goals, as Kocherlakota has suggested. I
see expanding the longer-run goals statement as a potentially useful step forward. However,
this statement is generally viewed as quasi-constitutional, a foundational document for the
Committee’s activities rather than a description of what it is doing at any point in time. So, in
addition, it is important for the FOMC to talk directly about its destination in its routine postmeeting communications.
Staff at the Federal Reserve Bank of Minneapolis have experimented with alternative ways
of writing the FOMC’s post-meeting statement to communicate more effectively. Box 3 (on
page 21) shows an example based on the statement from January 2015. I emphasize that this
example is intended to illustrate a different communications approach for the same policy
decision—not any difference in the policy decision itself.
The FOMC’s actual January 2015 statement begins with two paragraphs describing recent
economic developments and the Committee’s economic outlook. The Committee then lays
out a roadmap for the federal funds rate and states that the rate will be data dependent. The
statement indicates that the Committee expects to be “patient” in normalizing policy, a word
that the FOMC also used in its previous statement and that Yellen translated in a December
2014 press conference as indicating that the Committee was not likely to raise interest rates
for at least the next two meetings. Thus, by repeating the word “patient” in January 2015, the
Committee decided to extend by one meeting the period when it was not likely to raise interest rates. The statement also describes plans for asset holdings and concludes with a long-run
roadmap for the funds rate.
The experimental alternative statement shows that the original can easily be modified to
emphasize the economic destination, without any change in the policy decision that the statement conveys.14 The alternative statement begins by stating the day’s policy action and what
destination it is expected to achieve. (The description of the destination draws on Committee
participants’ forecasts, published in the December 2014 Summary of Economic Projections, of
likely economic outcomes under appropriate monetary policy.) The experimental alternative
then gives details on the current policy roadmap. For interest rates, the roadmap avoids using
“patient” as a code word and simply states that the Committee is unlikely to raise rates at its
next two meetings. For asset holdings, the roadmap draws on the Committee’s September 2014

J O E PACZ KOWSK I P H OTO G RAP H Y

19

The Region

statement on policy normalization principles. Finally, to help make the destination credible,
the experimental alternative explains why the FOMC believes the roadmap will lead to the
destination.
Monetary policymakers in other places and times have also communicated effectively
about their destinations. In July 2012, as a sovereign debt crisis threatened the stability of the
single European currency, the euro, European Central Bank (ECB) President Mario Draghi
said, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And
believe me, it will be enough.”15 Draghi did not say anything about what “it” would involve.
Still, this clear statement about the outcomes the ECB sought to achieve increased confidence
that those outcomes would, in fact, be achieved, and the euro rose 1.2 percent against the dollar on the day of Draghi’s speech.16
In 2013, Kocherlakota called for “goal-oriented monetary policy,” in which the FOMC
would articulate a clear goal and do “whatever it took” to achieve that goal.17 He argued that
U.S. policymakers successfully used such an approach to bring down rampant inflation in the
early 1980s and ought to use it again to fight severe employment shortfalls in the present day.
More broadly, though, communication about the destination need not be a tool deployed
only in extraordinary circumstances. It may be tempting to think that because the Federal
Reserve achieved good results for the two decades before the financial crisis without communicating about its destination, such communication will again be superfluous now that the
crisis has passed and the recovery is well under way. But if the FOMC does not communicate
its goals, the public must infer those goals from the FOMC’s actions. In the stable economic
environment that existed before the crisis, such inferences were relatively easy. Today, by contrast, policymakers and the public face an unusual degree of uncertainty about economic fundamentals.18
Even in good economic times—which, after many years of recovery, 2015 may finally
bring—explaining both the policy roadmap and the destination can help better align public
expectations with policymakers’ goals.

20

BOX 3, PART 1

REWRITING THE FOMC STATEMENT TO BETTER COMMUNICATE POLICY
Minneapolis Fed staff have experimented with alternative wording for the FOMC’s post-meeting statements
to better communicate policy actions and rationales. On this page is the original text of the FOMC’s Jan. 28,
2015, statement. On the next page is a possible alternative wording of that same statement.

ORIGINAL STATEMENT FOR JAN. 28, 2015
Information received since the Federal Open Market Committee

both realized and expected—toward its objectives of maximum

met in December suggests that economic activity has been ex-

employment and 2 percent inflation. This assessment will take

panding at a solid pace. Labor market conditions have improved

into account a wide range of information, including measures of

further, with strong job gains and a lower unemployment rate. On

labor market conditions, indicators of inflation pressures and in-

balance, a range of labor market indicators suggests that under-

flation expectations, and readings on financial and international

utilization of labor resources continues to diminish. Household

developments. Based on its current assessment, the Committee

spending is rising moderately; recent declines in energy prices

judges that it can be patient in beginning to normalize the stance

have boosted household purchasing power. Business fixed invest-

of monetary policy. However, if incoming information indicates

ment is advancing, while the recovery in the housing sector re-

faster progress toward the Committee’s employment and infla-

mains slow. Inflation has declined further below the Committee’s

tion objectives than the Committee now expects, then increases

longer-run objective, largely reflecting declines in energy prices.

in the target range for the federal funds rate are likely to occur

Market-based measures of inflation compensation have declined

sooner than currently anticipated. Conversely, if progress proves

substantially in recent months; survey-based measures of longer-

slower than expected, then increases in the target range are likely

term inflation expectations have remained stable.

to occur later than currently anticipated.

Consistent with its statutory mandate, the Committee seeks

The Committee is maintaining its existing policy of reinvest-

to foster maximum employment and price stability. The Com-

ing principal payments from its holdings of agency debt and

mittee expects that, with appropriate policy accommodation,

agency mortgage-backed securities in agency mortgage-backed

economic activity will expand at a moderate pace, with labor

securities and of rolling over maturing Treasury securities at

market indicators continuing to move toward levels the Com-

auction. This policy, by keeping the Committee’s holdings of

mittee judges consistent with its dual mandate. The Committee

longer-term securities at sizable levels, should help maintain ac-

continues to see the risks to the outlook for economic activity

commodative financial conditions.

and the labor market as nearly balanced. Inflation is anticipated

When the Committee decides to begin to remove policy ac-

to decline further in the near term, but the Committee expects

commodation, it will take a balanced approach consistent with

inflation to rise gradually toward 2 percent over the medium

its longer-run goals of maximum employment and inflation of

term as the labor market improves further and the transitory

2 percent. The Committee currently anticipates that, even after

effects of lower energy prices and other factors dissipate. The

employment and inflation are near mandate-consistent levels,

Committee continues to monitor inflation developments closely.

economic conditions may, for some time, warrant keeping the

To support continued progress toward maximum employ-

target federal funds rate below levels the Committee views as

ment and price stability, the Committee today reaffirmed its

normal in the longer run.

view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to
maintain this target range, the Committee will assess progress—

21

BOX 3, PART 2

REWRITING THE FOMC STATEMENT TO BETTER COMMUNICATE POLICY
Minneapolis Fed staff have experimented with alternative wording for the FOMC’s post-meeting statements
to better communicate policy actions and rationales. On the previous page is the original text of the FOMC’s
Jan. 28, 2015, statement. On this page is a possible alternative wording of that same statement.

A REWRITTEN STATEMENT FOR JAN. 28, 2015
SUMMARY
On Jan. 28, 2015, the Federal Open Market Committee de-

• FUTURE PLAN : At some time after it begins increasing

cided to maintain the current levels of its monetary policy

the federal funds rate target, the Committee will reduce its

instruments. The Committee extended by one meeting the

asset holdings by stopping reinvestment of principal pay-

period when it is not likely to increase the federal funds

ments. In the long run, the Committee will hold primarily

rate target. The Committee expects that its plan for the fed-

Treasury securities.

eral funds rate and asset holdings will return the economy

RATIONALE

to maximum employment this year and to an inflation rate

The Committee determines how to attain its statutory man-

near 2 percent within two to three years.

date of maximum employment and price stability by re-

POLICY STANCE

viewing information on resource utilization and inflation.

FEDERAL FUNDS RATE

RESOURCE UTILIZATION

• CURRENT LEVEL: The target range remains 0 to 1/4

The labor market has improved further, with strong job

percent.

gains and a lower unemployment rate. Risks to the outlook

• FUTURE PLAN: The Committee is not likely to increase

for resource utilization appear nearly balanced.

the target range at either of its next two meetings. The
Committee will continue to set the target range based on

INFLATION

realized and expected progress toward its inflation and em-

Falling energy prices have pushed inflation further below

ployment objectives. The Committee will use a wide range

the Committee’s longer-run objective of 2 percent. Market-

of information to assess this progress and will take a bal-

based measures of inflation compensation have declined

anced approach to the two goals. Even after employment

substantially in recent months. However, survey-based

and inflation are near the objectives, the Committee may

measures of longer-term inflation expectations have re-

temporarily need to keep the target federal funds rate below

mained stable. Inflation will probably fall more in coming

normal levels in order to achieve the dual mandate.

months before rebounding as the labor market improves
and transitory influences dissipate.

ASSET HOLDINGS
• CURRENT ACTIVITY: The Committee will continue re-

POLICY DECISION

investing principal payments from agency debt and agency

The Committee determined that its outlook for employment

mortgage-backed securities in agency mortgage-backed se-

and inflation over the medium term, coupled with stable sur-

curities. The Committee will continue rolling over matur-

vey-based measures of longer-run inflation expectations, jus-

ing Treasury securities at auction.

tifies maintaining the current stance of monetary policy.

22

The Region

ENDNOTES
1

The metaphor of roadmaps and destinations is inspired by Andrew Levin’s use of global positioning system-based
devices for generating driving directions as a metaphor for monetary policy communications in remarks at the 2014
Bank of Canada Annual Research Conference. But where Levin called for more attention to turn-by-turn directions,
this essay emphasizes ultimate outcomes.
2

See Stein (2014).

3

For a contrasting perspective, see Stein (1989).

4

See, for example, Yellen (2013).

5

See Yellen (2013) for more on this point.

6

The Committee did leave open the possibility that it would raise interest rates before unemployment fell to 6.5
percent if inflation was projected to be unduly high or inflation expectations became unanchored.
7

See Bullard (2012) and Federal Open Market Committee (2012). One participant, Federal Reserve Bank of Philadelphia President Charles Plosser, later called for the threshold to be converted to a trigger; see Plosser (2013).
8

The nominal interest rate is the rate a borrower pays a lender; it is not adjusted for inflation.

9

See Benhabib, Schmitt-Grohé, and Uribe (2002) and Cochrane (2015).

10

See Kocherlakota (2014).

11

See Powell (2013).

12

See Kydland and Prescott (1977).

13

The terms refer to the Oracle of Delphi, a priestess renowned for her prophesies, and to the Greek king Odysseus,
who had himself tied to the mast of his ship so he could resist the temptation of the sirens’ song.
14

Because the experimental statement is designed to reflect the FOMC’s actual policy decision in January 2015, it
does not necessarily reflect the views of Kocherlakota, who is not a voting member of the FOMC in 2015.
15

See Draghi (2012).

16

But the ECB’s recent experience also shows the limits of communicating about the destination. ECB officials
have said repeatedly that they are aiming for inflation close to 2 percent. Nonetheless, both the inflation rate and
market-based measures of inflation expectations slid significantly in the eurozone in 2014. Communication about a
destination will persuade the public to expect that destination only if the central bank also shows by its other actions
that it will indeed do what it takes to get there.
17

See Kocherlakota (2013).

18

Witness the current academic debate about “secular stagnation,” the possibility that the economy’s long-run
growth rate will be much lower than in the past. (See Teulings and Baldwin 2014.) Such stagnation, to the extent
it occurs, will tend to require lower interest rates for any given level of inflation and employment. But with little
agreement among leading experts about whether secular stagnation is occurring, it will be challenging for the public
to infer the meaning of any particular interest rate choice by the FOMC: Does it signal a change in the Committee’s
assessment of the risks of secular stagnation, a change in the Committee’s desired paths for inflation and employment, or some other change?

23

The Region

REFERENCES
Benhabib, Jess, Stephanie Schmitt-Grohé, and Martin Uribe. 2002. “Avoiding Liquidity Traps.” Journal
of Political Economy 110 (3): 535-63.
Bullard, James. 2012. “Making Sense of Thresholds, Triggers, Twists, and Timelines.” Presentation to
147th Annual Meeting of the Little Rock Regional Chamber of Commerce, Little Rock, Ark., Dec. 3.
Campbell, Jeffrey R., Charles L. Evans, Jonas D.M. Fisher, and Alejandro Justiniano. 2012. “Macroeconomic Effects of Federal Reserve Forward Guidance.” Brookings Papers on Economic Activity 44 (1): 1-54.
Cochrane, John H. 2015. “The New-Keynesian Liquidity Trap.” Manuscript, University of Chicago.
Draghi, Mario. 2012. Speech at the Global Investment Conference, London, England, July 26.
Federal Open Market Committee. 2012. “Minutes of the Federal Open Market Committee, Dec. 11-12, 2012.”
Hachem, Kinda, and Jing Cynthia Wu. 2014. “Inflation Announcements and Social Dynamics.” Working Paper 20161, National Bureau of Economic Research.
Kocherlakota, Narayana R. 2013. “A Time of Testing.” Speech to the Rotary Club of Houghton, Mich.,
Sept. 26.
Kocherlakota, Narayana R. 2014. “On the Objectives of Monetary Policy.” Speech to the Economic Club
of Marquette County, Marquette, Mich., Sept. 22.
Kydland, Finn E., and Edward C. Prescott. 1977. “Rules Rather than Discretion: The Inconsistency of
Optimal Plans.” Journal of Political Economy 85 (3): 473-92.
Orphanides, Athanasios, and John C. Williams. 2004. “Imperfect Knowledge, Inflation Expectations,
and Monetary Policy.” In Ben S. Bernanke and Michael Woodford, eds., The Inflation-Targeting Debate.
Chicago: University of Chicago Press.
Plosser, Charles I. 2013. “Assessing Monetary Policy.” Speech to the Global Interdependence Center’s
Fifth Annual Rocky Mountain Economic Summit, July 12.
Powell, Jerome H. 2013. “Communications Challenges and Quantitative Easing.” Speech at the 2013
Institute of International Finance Annual Membership Meeting, Washington, D.C., Oct. 11.
Stein, Jeremy C. 1989. “A Theory of Imprecise Policy Announcements.” American Economic Review 79
(1): 32-42.
Stein, Jeremy C. 2014. “Challenges for Monetary Policy Communication.” Speech to the Money Marketeers of New York University, New York, N.Y., May 6.
Teulings, Coen, and Richard Baldwin, eds. 2014. Secular Stagnation: Facts, Causes and Cures. London:
Centre for Economic Policy Research.
Yellen, Janet. 2013. “Communication in Monetary Policy.” Speech to the Society of American Business
Editors and Writers 50th Anniversary Conference, Washington, D.C., April 4.

24

J OE PACZKOWSKI P HOTOGRAPHY

2014
F E DE RA L R E S E RV E BAN K O F M I N N E AP O L I S

OPERATIONS REPORT

The Region

M E SSAGE F ROM T H E
F I RST V I C E PRE SI DE NT

In 1913, Congress created the Federal Reserve
System and gave it the mission to provide the United
States with a safer, more flexible, and more stable
monetary and financial system. As part of the new
Federal Reserve System, the Federal Reserve Bank of
Minneapolis opened for business in 1914 in leased
space in the Minnesota Loan and Trust building with a total staff of eight employees.
The subsequent 100 years has been a period of remarkable growth and change for our
country and economy. Over this time, the Federal Reserve has also grown and changed as
Congress has revised and expanded its responsibilities. But despite the enormous differences
between the situation today and that of 100 years ago, the Federal Reserve is connected to its
past through its focus on fulfilling its mission and an unwavering commitment to always act
in the public interest. At the Federal Reserve Bank of Minneapolis, we work hard every day
to put our core values into practice as we strive to contribute to the System’s fulfillment of its
mission to foster the stability, integrity, and efficiency of the nation’s monetary, financial, and
payments systems.
We will begin 2015 with a staff of about 1,100 and an operating budget of a little over $200
million. At least as significant as the growth in the size of the Bank has been the increase
in the diversity of our activities and our staff. Given that the Bank’s responsibilities include
operational, supervisory, research, and support functions, the employees of the Bank represent
a rich and diverse tapestry of backgrounds, skills, and points of view. To ensure our continuing
success in the face of change, we must be able to fully utilize our diverse skills and perspectives.
It is for this reason that the Bank has been working hard to foster a culture of inclusion.
Research shows that diverse teams make better decisions, but only if they operate in a context
of inclusiveness and trust.
In terms of its operating results, the Bank had a strong year in 2014. We achieved our
strategic objectives and our operational metrics. Our expenses were below budget, and we
had no significant compliance issues. The accompanying “2014 by the Numbers” highlights
the scope of some of the Bank’s operations. In a variety of areas, such as the FedACH, the

28

1

2014 BY THE NUMBERS
IN 2014 THE FEDERAL RESERVE BANK
OF MINNEAPOLIS PROCESSED
n 13.4 billion ACH (Automated Clearing House) payments worth approximately
$24.8 trillion. FedACH is a nationwide system, developed and operated by Minneapolis staff on behalf of the entire Federal Reserve System, which provides the
electronic exchange of debits and credits.

n $11.5 billion of currency deposits from financial institutions, destroyed $5.9 billion of currency not fit for circulation, and shipped $13.4 billion of currency to financial
institutions.

n 132,000 transactions for the 50 million investors who hold $176 billion in U.S. Savings
Bonds and answered 408,000 calls and written inquiries from investors as the Treasury
Retail Securities site for the Federal Reserve System.

n 218,000 customer support calls and issued 51,000 credentials for Federal Reserve payment and information services as one of two national Customer Contact Centers.

n 296,600 calls and created 321,900 tickets by the National Service Desk; Minneapolis is
one of two sites that provide frontline IT support for the Federal Reserve System.

29

1
The Region

Customer Contact Center, and the National Service Desk, we have operational responsibilities
that support the System more broadly. In a similar vein, as the Federal Reserve Treasury
Retail Securities site, we support the Bureau of the Public Debt’s retail program by servicing
electronic and paper U.S. Savings Bonds and Treasury marketable securities. Managing these
consolidated operational responsibilities requires effective coordination and collaboration
with numerous stakeholders across the System and beyond.
In 2014, we met all of our supervision and regulation mandates and conducted a robust
industry outreach program. In the policy arena, our research staff showcased their scholarship
through numerous publications and conference presentations. In addition, Bank officers and
staff made material contributions to the development of various System supervisory policies.
Effective outreach efforts across the Ninth District allow us to maximize the benefits afforded by the regional structure of the Federal Reserve. Last year, we continued to work with
communities, nonprofit organizations, lenders, educators, and others in the district and across
the nation to encourage financial and economic literacy, address housing problems, promote
equal access to credit, and advance economic and community development.
The Bank’s Office of Minority and Women Inclusion established under Section 342 of the
Dodd-Frank Act continued its work to ensure equal opportunity and racial, ethnic, and gender
diversity in our workforce and senior management and the participation of minority- and
women-owned businesses in our procurement activities. These efforts reinforce the Bank’s
longstanding and ongoing commitment to diversity and inclusion in our workforce and
suppliers.
As we look to the future, we will continue to be guided by a focus on fulfilling our mission
and an unwavering commitment to always act in the public interest.

James M. Lyon
First Vice President

30

1

2014 FINANCIAL STATEMENTS
FEDERAL RESERVE BANK OF MINNEAPOLIS
federalreserve.gov/monetarypolicy/files/BSTMinneapolisfinstmt2014.pdf
federalreserve.gov/monetarypolicy/bst_fedfinancials.htm

AUDITOR INDEPENDENCE
The Federal Reserve Board engaged Deloitte & Touche LLP (D&T) to audit the 2014 combined and individual financial statements of the Reserve Banks and Maiden Lane LLC. 1
In 2014, D&T also conducted audits of internal controls over financial reporting for each
of the Reserve Banks. Fees for D&T’s services totaled $7 million, of which $0.4 million
was for the audit of Maiden Lane LLC. To ensure auditor independence, the Board requires
that D&T be independent in all matters relating to the audits. Specifically, D&T may not
perform services for the Reserve Banks or others that would place it in a position of
auditing its own work, making management decisions on behalf of the Reserve Banks, or
in any other way impairing its audit independence. In 2014, the Bank did not engage D&T
for any non-audit services.
1

In addition, D&T audited the Office of Employee Benefits of the Federal Reserve System (OEB), the Retirement Plan

for Employees of the Federal Reserve System (System Plan), and the Thrift Plan for Employees of the Federal Reserve
System (Thrift Plan). The System Plan and the Thrift Plan provide retirement benefits to employees of the Board, the
Federal Reserve Banks, the OEB, and the Consumer Financial Protection Bureau.

31

J O E PACZKOWSKI P HOTO GRAP HY

2014
F E DE RA L R E S E RV E BAN K O F M I N N E AP O L I S

DIRECTORS
ADVISORY COUNCILS
SENIOR MANAGEMENT
OFFICERS

COMMUNITY DEPOSITORY INSTITUTIONS ADVISORY COUNCIL

RICHARD
ODENTHAL

STEVEN
GROOMS

BRIAN
JOHNSON

DAVID
WILLIAMS

CRYSTAL
HATCHER
GREG
BORMANN

LORA
BENRUD

RAYMOND
SMITH

KEVIN
MAYER

BRIAN JOHNSON (CHAIR)
CEO
CHOICE FINANCIAL
GRAND FORKS, NORTH DAKOTA

STEVEN GROOMS
CEO
1ST LIBERTY FEDERAL CREDIT UNION
GREAT FALLS, MONTANA

RICHARD ODENTHAL
PRESIDENT
CENTRAL MINNESOTA CREDIT UNION
MELROSE, MINNESOTA

LORA BENRUD
CEO
WESTCONSIN CREDIT UNION
MENOMONIE, WISCONSIN

ERIC HARDMEYER NOT PICTURED
PRESIDENT AND CEO
BANK OF NORTH DAKOTA
BISMARCK, NORTH DAKOTA

RAYMOND SMITH
PRESIDENT AND CEO
FIRST NATIONAL BANK IN PHILIP
PHILIP, SOUTH DAKOTA

GREG BORMANN
PRESIDENT AND CEO
FARMERS STATE BANK
STICKNEY, SOUTH DAKOTA

CRYSTAL HATCHER
SENIOR VICE PRESIDENT
VENTURE BANK
GOLDEN VALLEY, MINNESOTA

DAVID WILLIAMS
PRESIDENT AND CEO
UPPER PENINSULA STATE BANK
ESCANABA, MICHIGAN

MARK BRAGELMAN NOT PICTURED
PRESIDENT
LIBERTY SAVINGS BANK
ST. CLOUD, MINNESOTA

KEVIN MAYER
CEO
RICHLAND FEDERAL CREDIT UNION
SIDNEY, MONTANA

NI E DOR F V I SUALS

34

TWIN CITIES ADVISORY COUNCIL

SCOTT
CRUMP
DARIN
LYNCH

JEROME
GERBER

DALE
ANDERSEN

SARAH
CARUSO
LEM
AMEN
TERRY
NELSON

GARY
LEE

LEM AMEN (CHAIR)
PRESIDENT AND CEO
VIKING ENGINEERING & DEVELOPMENT
FRIDLEY, MINNESOTA

JEROME GERBER
VICE PRESIDENT-STRATEGIC SOLUTIONS
AWARD STAFFING
BLOOMINGTON, MINNESOTA

DARIN LYNCH
PRESIDENT
IRISH TITAN
MINNEAPOLIS, MINNESOTA

DALE ANDERSEN
PRESIDENT AND CEO
DELKOR SYSTEMS
ST. PAUL, MINNESOTA

GARY LEE
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
RAHR CORP.
SHAKOPEE, MINNESOTA

TERRY NELSON
SECRETARY TREASURER
PAINTERS DISTRICT COUNCIL 82
LITTLE CANADA, MINNESOTA

SARAH CARUSO
PRESIDENT AND CEO
GREATER TWIN CITIES UNITED WAY
MINNEAPOLIS, MINNESOTA

JOY LINDSAY
PRESIDENT
STARTEC INVESTMENTS
MINNEAPOLIS, MINNESOTA

SCOTT CRUMP
CEO
STRATASYS
EDEN PRAIRIE, MINNESOTA

35

RAJIV TANDON NOT PICTURED
CHAIRMAN AND CEO
ADAYANA
MINNEAPOLIS, MINNESOTA

JOY
LINDSAY

GREAT LAKES ADVISORY COUNCIL

RUSSELL
DERICKSON

PAUL
BAUER

STACEY
FOWLER

TODD
MANDEL
ELAINE
HANSEN

DON
MAKI

BRIAN HITI (CHAIR)
MINING COORDINATOR
IRON RANGE RESOURCES AND
REHABILITATION BOARD
EVELETH, MINNESOTA
PAUL BAUER
CEO
ELLSWORTH CREAMERY COOPERATIVE
ELLSWORTH, WISCONSIN
JOHN CORDES NOT PICTURED
OWNER
CORDES CROP INSURANCE
COMSTOCK, WISCONSIN

BRIAN
HITI

STACEY FOWLER
SENIOR VICE PRESIDENT
SCHWAN FOOD COMPANY
BLOOMINGTON, MINNESOTA

RON KIRSCHT
PRESIDENT
DONNELLY CUSTOM MANUFACTURING
ALEXANDRIA, MINNESOTA

ELAINE HANSEN
DIRECTOR
UMD CENTER FOR ECONOMIC
DEVELOPMENT
DULUTH, MINNESOTA

DON MAKI
COMMISSIONER
FEDERAL MEDIATION AND CONCILIATION
SERVICE
HANCOCK, MICHIGAN

MELISSA HINKSON NOT PICTURED
MANAGER
MILL CREEK ASSISTED LIVING AND
MEMORY CARE CENTERS
MARQUETTE, MICHIGAN

TODD MANDEL
COMMUNITY DEVELOPMENT DIRECTOR
COULEECAP
LA CROSSE, WISCONSIN

RUSSELL DERICKSON
HIGHWATER ETHANOL
MINNESOTA SOY BEAN PROCESSORS
LAMBERTON, MINNESOTA
ra u+ ba r b e r

RON
KIRSCHT

36

GREAT PLAINS ADVISORY COUNCIL

BRETT
RIDDLE
TOM
HEINE

PETER
HEGG
PRAIRIE ROSE
SEMINOLE

ARLON
FRANZ
CLARK
COLEMAN

GLEN
CRAWFORD
TOM
JOHNSON

KENT
ELLIS

BRETT RIDDLE (CHAIR)
CEO
RIDDLE’S GROUP
RAPID CITY, SOUTH DAKOTA

ARLON FRANZ
OWNER
FRANZ CONSTRUCTION
SIDNEY, MONTANA

JOHN MCDONNELL NOT PICTURED
VICE PRESIDENT
CIRCLE S SEEDS
THREE FORKS, MONTANA

CLARK COLEMAN
PRESIDENT
D.J. COLEMAN
BALDWIN, NORTH DAKOTA

PETER HEGG
CHAIRMAN
HEGG COMPANIES
SIOUX FALLS, SOUTH DAKOTA

PRAIRIE ROSE SEMINOLE
STRATEGIC PREVENTION SPECIALIST
BOYS AND GIRLS CLUB OF THE THREE
AFFILIATED TRIBES
NEW TOWN, NORTH DAKOTA

GLEN CRAWFORD
ABERDEEN, SOUTH DAKOTA

TOM HEINE
OWNER
TOM HEINE CATTLE COMPANY
YANKTON, SOUTH DAKOTA

KENT ELLIS
AURORA ENERGY SOLUTIONS
BISMARCK, NORTH DAKOTA

TOM JOHNSON
PRESIDENT
CHANGING TIMES
WATERTOWN, SOUTH DAKOTA

37

MINNEAPOLIS BOARD OF DIRECTORS

RANDY
NEWMAN

KENNETH
PALMER

LAWRENCE
SIMKINS

HOWARD
DAHL

MAYKAO
HANG

CATHERINE
KELLY

CHRISTINE
HAMILTON

KENDALL
POWELL

RANDALL
HOGAN

CLASS A DIRECTORS

CLASS B DIRECTORS

CLASS C DIRECTORS

(ELECTED BY MEMBER BANKS TO REPRESENT MEMBER BANKS)

(ELECTED BY MEMBER BANKS TO REPRESENT THE PUBLIC)

(APPOINTED BY THE BOARD OF GOVERNORS TO REPRESENT THE PUBLIC)

CATHERINE KELLY
PRESIDENT AND CEO
MINNESOTA BANK AND TRUST
EDINA, MINNESOTA

HOWARD DAHL
PRESIDENT AND CEO
AMITY TECHNOLOGY
FARGO, NORTH DAKOTA

MAYKAO HANG (DEPUTY CHAIR)
PRESIDENT AND CEO
AMHERST H. WILDER FOUNDATION
ST. PAUL, MINNESOTA

RANDY NEWMAN
CHAIRMAN AND CEO
ALERUS FINANCIAL & ALERUS FINANCIAL CORP.
GRAND FORKS, NORTH DAKOTA

CHRISTINE HAMILTON
MANAGING PARTNER
CHRISTIANSEN LAND AND CATTLE
KIMBALL, SOUTH DAKOTA

RANDALL HOGAN (CHAIR)
CHAIRMAN AND CEO
PENTAIR
MINNEAPOLIS, MINNESOTA

KENNETH PALMER
CHAIRMAN, PRESIDENT AND CEO
RANGE FINANCIAL CORP. & RANGE BANK
NEGAUNEE, MICHIGAN

LAWRENCE SIMKINS
PRESIDENT AND CHAIRMAN
WASHINGTON CORPORATIONS
MISSOULA, MONTANA

KENDALL POWELL
CHAIRMAN AND CEO
GENERAL MILLS
MINNEAPOLIS, MINNESOTA

rau+ ba r be r

38

HELENA BRANCH BOARD OF DIRECTORS

BARBARA
STIFFARM

DAVID
SOLBERG

THOMAS
SWENSON
MARSHA
GOETTING
DUANE
KUROKAWA

MARSHA GOETTING (CHAIR)
PROFESSOR AND EXTENSION FAMILY
ECONOMICS SPECIALIST
MONTANA STATE UNIVERSITY
BOZEMAN, MONTANA
DUANE KUROKAWA
PRESIDENT
WESTERN BANK OF WOLF POINT
WOLF POINT, MONTANA

DAVID SOLBERG (DEPUTY CHAIR)
OWNER
SEVEN BLACKFOOT RANCH CO.
BILLINGS, MONTANA
BARBARA STIFFARM
EXECUTIVE DIRECTOR
OPPORTUNITY LINK
HAVRE, MONTANA

THOMAS SWENSON
PRESIDENT AND CEO
BANK OF MONTANA AND BANCORP OF
MONTANA HOLDING CO.
MISSOULA, MONTANA

FEDERAL ADVISORY
COUNCIL MEMBER
PATRICK DONOVAN
PRESIDENT AND CEO
BREMER FINANCIAL CORP.
ST. PAUL, MINNESOTA

39

2014 SENIOR MANAGEMENT

CLAUDIA
SWENDSEID

NIEL
WILLARDSON

RON
FELDMAN

DUANE
CARTER
NARAYANA
KOCHERLAKOTA

LINDA
GILLIGAN

SAM
SCHULHOFER-WOHL

JIM
LYON

DOROTHY
BRIDGES

NARAYANA KOCHERLAKOTA
PRESIDENT
JIM LYON
FIRST VICE PRESIDENT
DOROTHY BRIDGES
SENIOR VICE PRESIDENT

DUANE CARTER
SENIOR VICE PRESIDENT, DIRECTOR OF OFFICE
OF MINORITY AND WOMEN INCLUSION &
EQUAL EMPLOYMENT OPPORTUNITY OFFICER
RON FELDMAN
EXECUTIVE VICE PRESIDENT &
SENIOR POLICY ADVISER
LINDA GILLIGAN
SENIOR VICE PRESIDENT &
GENERAL AUDITOR

SAM SCHULHOFER-WOHL
SENIOR VICE PRESIDENT &
DIRECTOR OF RESEARCH
CLAUDIA SWENDSEID
SENIOR VICE PRESIDENT
NIEL WILLARDSON
SENIOR VICE PRESIDENT,
GENERAL COUNSEL &
CORPORATE SECRETARY
DECEMBER 31, 2014

ra u+ ba r be r

40

2014 OFFICERS
PETER BAATRUP
VICE PRESIDENT,
ASSISTANT GENERAL COUNSEL &
SYSTEM PRIVACY COORDINATOR
KARIN BEARSS
VICE PRESIDENT
SHERYL BRITSCH
VICE PRESIDENT
MICHELLE BRUNN
VICE PRESIDENT
BARBARA COYLE
VICE PRESIDENT
TIMOTHY DEVANEY
VICE PRESIDENT

PAUL RIMMEREID
VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
DAVID SCHWIETZ
VICE PRESIDENT
SHARON SYLVESTER
VICE PRESIDENT

TERRY FITZGERALD
VICE PRESIDENT &
SENIOR ECONOMIST
CHRISTINE GAFFNEY
VICE PRESIDENT
MICHAEL GARRETT
VICE PRESIDENT
KENNETH HEINECKE
VICE PRESIDENT
JACQUELINE KING
VICE PRESIDENT
DEBRA KNILANS
VICE PRESIDENT
BARBARA PFEFFER
VICE PRESIDENT
MARK RAUZI
VICE PRESIDENT

AMY KYTONEN
ASSISTANT VICE PRESIDENT
CHAD LAUBER
ASSISTANT VICE PRESIDENT
TODD MAKI
ASSISTANT VICE PRESIDENT

RICHARD TODD
VICE PRESIDENT
DIANN TOWNSEND
VICE PRESIDENT
JOHN YANISH
VICE PRESIDENT &
DEPUTY GENERAL COUNSEL

JOSEPH FAHNHORST
VICE PRESIDENT
DAVID FETTIG
VICE PRESIDENT &
DIRECTOR OF PUBLIC AFFAIRS

ELIZABETH KITTELSON
ASSISTANT VICE PRESIDENT

HELENE MANN
ASSISTANT VICE PRESIDENT
FREDERICK MILLER
ASSISTANT VICE PRESIDENT
LUANNE PEDERSON
ASSISTANT VICE PRESIDENT,
ASSISTANT GENERAL COUNSEL &
ASSISTANT CORPORATE SECRETARY

KENNETH BEAUCHEMIN
ASSISTANT VICE PRESIDENT &
SENIOR ECONOMIST

RANDY ST. AUBIN
ASSISTANT GENERAL AUDITOR

BRADLEY BEYTIEN
ASSISTANT VICE PRESIDENT

ROBERT SAUVÉ
ASSISTANT VICE PRESIDENT

JACQUELYN BRUNMEIER
ASSISTANT VICE PRESIDENT

THOMAS TALLARINI
ASSISTANT VICE PRESIDENT &
POLICY ADVISER

MESUDE CINGILLI
ASSISANT VICE PRESIDENT
GREGORY CUTSHALL
ASSISTANT VICE PRESIDENT
MATTHEW DIETTE
ASSISTANT VICE PRESIDENT
RAMON FLORES
ASSISTANT VICE PRESIDENT
MICHAEL GROVER
ASSISTANT VICE PRESIDENT

SCOTT THOMAS-FORSS
ASSISTANT VICE PRESIDENT
DARIAN VIETZKE
ASSISTANT VICE PRESIDENT
MARK VUKELICH
ASSISTANT VICE PRESIDENT
SUSAN WOODROW
ASSISTANT VICE PRESIDENT
HELENA BRANCH OFFICER
DECEMBER 31, 2014

PAMELA HASENBERG
ASSISTANT VICE PRESIDENT
CHRISTOPHER JOHNSON
ASSISTANT VICE PRESIDENT

41