Meetings of the Federal Reserve's policy committee are about to become more eventful. The Federal Open Market Committee's first gathering of 2014 – scheduled for Tuesday and Wednesday in Washington – will be remembered as the final session convened by Ben Bernanke, whose historic tenure as chairman concludes on Friday.
The meeting also will offer the first glimpse of a new lineup of policy makers. With Janet Yellen's ascent to the most important job in central banking, she will be leading a rather different group than the one that backed Mr. Bernanke's aggressive stimulus measures last year.
Ms. Yellen will aim to stay the course. Doing so could mean carrying several of her new charges kicking and screaming .
The FOMC has 19 spots: the seven members of the Federal Reserve Board in Washington and the presidents of the 12 regional Fed banks in cities such as New York, Chicago and San Francisco. However, only five of the regional presidents are allowed votes on policy in a given year: the New York president on a permanent basis and a rotating group from the other banks.
Last year's group of regional presidents was fairly co-operative. Esther George of Kansas City dissented at every meeting but the last one, when her note of displeasure was played by Boston's Eric Rosengren. (They dissented for opposite reasons; Ms. George thought the Fed was doing too much and Mr. Rosengren because he thought scaling back stimulus was a mistake.) Otherwise, there appeared to be little discord.
This year's group promises to be a little more volatile. In as voters are Richard Fisher of Dallas, Charles Plosser of Philadelphia, Sandra Pianalto of Cleveland and Narayana Kocherlakota of Minneapolis.
"Yellen's first year as Fed chair has the potential to be volatile, and the changing cast of voters does introduce some modest uncertainty into the markets," Michael Hanson, an economist at Bank of America Merrill Lynch, said in a report last week.
Let's separate Ms. Pianalto from the troublemakers. She has an established record as a centrist on policy; she also has said she intends to retire this year. Until she leaves, it is safe to assume she will side with Ms. Yellen and the majority.
It is equally safe to assume that Mr. Fisher won't. If the Federal Reserve System has a crazy uncle, it is Mr. Fisher. Earlier this month he gave a speech titled "Beer Goggles, Monetary Camels, the Eye of the Needle, and the First Law of Holes."
Mr. Fisher used the speech to give his assessment of the policy committee's decision in December to reduce its monthly purchases of bonds in January by $10-billion (U.S.). Mr. Fisher told his audience in Dallas that he would have reduced asset purchases at twice that pace.
"As soon as feasible, we should change tack," Mr. Fisher said. "We should stop digging. I plan to cast my votes at FOMC meetings accordingly."
Mr. Plosser is another critic of the Fed's testing of the bounds of monetary policy. He is a traditionalist who is skeptical of the central bank trying to do too much.
At the other extreme is Mr. Kocherlakota. He began his career in the Federal Reserve as a conservative policy maker, or a "hawk," like Mr. Plosser, putting price stability ahead of economic growth as his primary concern. Then he flipped. He is now one of the Fed's biggest advocates of stimulus.
Mr. Kocherlakota thinks the Fed should tell the public that it will leave the benchmark lending rate at zero until the unemployment rate drops to 5.5 per cent, more aggressive than the Fed's current guidance that it will do so until the rate is "well past" 6.5 per cent. (The jobless rate currently is 6.7 per cent.) Like Mr. Fisher and Mr. Plosser, Mr. Kocherlakota is a prime candidate for dissent, although for different reasons.
There are more changes coming. President Barack Obama at the end of last year nominated Stanley Fischer as No. 2 at the Federal Reserve Board. Reports suggest Ms. Yellen lobbied for Mr. Fischer as her top lieutenant. That's a good start.