FOMC policy preferences and economic policy uncertainty

This paper studies the relationship between the individual monetary policy preferences of Federal Open Market Committee meeting participants and the private sector’s economic policy uncertainty. We find that an increase in economic policy uncertainty is associated with a preference for monetary policy easing, and this effect is in addition to any effect of policy uncertainty on inflation and output gap forecasts. We also show that the results are largely driven by presidents of Federal Reserve Banks, especially non-voting presidents of Federal Reserve Banks. •Economic policy uncertainty by the private sector influences the individual monetary policy preferences on the FOMC.•Increased economic policy uncertainty by the private sector increases the preference for monetary policy easing.•The effect of on monetary policy preferences is larger for the non-voting presidents of the Federal Reserve banks.