WASHINGTON – First comes the small talk about vacations or family -- usually anything but interest rates or the economy. But when Federal Reserve Chairman Alan Greenspan (search) enters the room, it's time to get to work.
The decisions made by Greenspan and two dozen colleagues gathered around a 27-foot-long mahogany table can touch millions of consumers, businesses and investors.
But their discussions aren't broadcast on C-SPAN (search) or other TV channels. They are conducted behind closed doors -- ornate wooden doors. Transcripts are released after five years.
The massive table with its black granite inlaid top sits beneath a 1,000-pound, brass-and-glass chandelier festooned with dignified eagles and hung from the 23-foot-high ceiling.
At one end of the room is a marble fireplace with a bronze relief of Demeter (search), Greek goddess of agriculture and a symbol to the Fed of stability and productivity. At the other is a U.S. map, painted in 1937, depicting the Federal Reserve System (search).
This is the stately setting for eight scheduled meetings each year of the Federal Open Market Committee (search), which sets interest rate policy in the United States. The Fed's first meeting of 2005 begins mid-afternoon this Tuesday and continues Wednesday morning.
Punctuality is prized.
"Early on when I was there, I got some important phone call right at the moment the meeting was about to start. So I was a couple of minutes late, walked in and it already started. People sort of looked askance. Nobody said anything, but I was very careful not to do it again," recalls Alice Rivlin (search), vice chair of the system's Board of Governors from 1996 through 1999.
The FOMC -- not to be confused with the Fruit of the Month Club say some Fed cutups -- is made up of the seven board members and five of the Fed's 12 regional bank presidents. Although only five bank presidents vote on policy at any given time, all 12 presidents attend and participate in debates. Several senior aides also sit at the table.
Most economists expect Fed policy-makers, in a pre-emptive strike against inflation, to boost a key short-term interest rate by one-quarter percentage point to 2.50 percent at the February meeting. That would be the sixth increase since the Fed began raising rates in June 2004.
Before the meetings, Fed members mill around and socialize, former Fed officials say. Greenspan usually enters when the meeting is about to begin, often through the door between his office and the boardroom.
"As Greenspan heads to his chair, everybody knows that's a signal -- get to your chair. Get ready. The meeting is going to start," remembers former Fed Governor Laurence Meyer (search). "When the chairman sits down, a green light goes on. The green light signifies that this meeting is being taped ... what you say will be immortalized."
The thimble-sized green light is discreetly located on the mahogany table next to a white light. The white light is illuminated when the tiny black microphones built into the table are on.
Formality is favored.
Seats are assigned. Greenspan sits on the side of the elliptical table, which measures 11-feet across at its widest point. The tops of Greenspan's chair and those of the six other board members have little brass plaques with their names.
The dress is conservative business attire-- suits for men and women. Rivlin, who loves color, especially red, brightened up the room in her day. For men, it's mostly dark suits, white shirts -- a few stripes here and there -- and firmly knotted ties.
"Occasionally, someone might wear a necktie that you would regard as flamboyant. But that is not the norm," says William Poole, president of the Federal Reserve Bank of St. Louis. Sometimes, Poole wears bull and bear cufflinks.
The core of the meetings are two staff presentations: one on the economic outlook and forecast, in a document called the Greenbook for its kelly green cover; the other on monetary policy options -- raising, lowering or holding interest rates and the rationale for each -- laid out in the Bluebook, named for its powder blue hue.
In the first presentation, the regional bank presidents tend to speak before the board members -- often relaying anecdotes from their regions, like a factory's hiring and investments plans, a bank's demand for mortgages, a farmer's outlook for winter wheat or citrus crops.
Greenspan usually doesn't talk during this part.
Members indicate that they want to speak by a wink, a head nod, a raised hand -- but not a waving hand like a fifth grader, says Rivlin. The deputy secretary, next to Greenspan, keeps track.
There's usually a break. Participants go into the hall, sip coffee or tea in black plastic cups and munch on doughnuts and muffins. While some might bring coffee into the meeting room, goodies stay outside. "No one, to my knowledge, has ever brought a doughnut into the room," Meyer says.
After the economic discussion, the Bluebook is presented. In this "go-round," Greenspan takes the lead, offering his view of the outlook and his recommendation on interest rates. Then, the other Fed members lay out their views. Eventually, there's a vote. Greenspan goes first, followed by the FOMC vice chairman, New York Fed President Timothy Geithner, then other voting members in alphabetical order.
The Fed's decision is publicly released around 2:15 p.m. EST.
By this time, Fed members have turned to a buffet lunch set up in the anteroom, including cold cuts, bread and cheese for sandwiches, pasta salad and soup. With the meeting over, people carry their selections on trays and eat and chat at the table in the meeting room.
"Don't get carried away with the notion of august mystique ... we all put our pants on the same way in the morning -- one leg at a time," says Poole, the St. Louis bank chief.