What Is the Beige Book?
The Beige Book is a report produced and published by the U.S. Federal Reserve (Fed). The report, referred to formally as the Summary of Commentary on Current Economic Conditions, is a qualitative review of economic conditions. The Beige Book is published eight times each year before meetings held by the Federal Open Market Committee (FOMC). It is considered one of the most valuable tools at the committee’s disposal for making key decisions about the economy.
The Beige Book summarizes this information by district and sector.
It is released at 2:00 pm EST two Wednesdays before each FOMC meeting.
This report lets outsiders know what the Fed governors are looking at as they prepare for their upcoming FOMC meeting.
Why is the Beige Book important?
The Fed uses this report and other indicators to determine interest rate policy at FOMC meetings.
The Beige Book is considered a valuable tool, acting in essence, as a general gauge on the economy's overall strength; it is even considered that occasionally it can have the power to shift market reactions if the findings represent a significant enough deviation from current analyst expectations.
However, it must be remembered that the report does not actually provide a clear view of what the FOMC members think about the economy but instead presents a series of economic facts concerning the various districts.
It is also worth bearing in mind that while these facts may be accurate, they appear in the form of descriptive information, not as a breakdown of the actual data itself.
If the Beige Book portrays inflationary pressure, the Fed may raise interest rates, bullish.
If the Beige Book portrays recessionary conditions, the Fed may lower interest rates, dollar bearish.
What is the Beige Book?
The ‘Beige Book’ is the informal name given to the Federal Reserve report. The full name for the Beige Book report is actually “Summary of Commentary on Current Economic Conditions by Federal Reserve District. “
The Beige Book is released eight times a year, two Wednesdays before each FOMC (Federal Open Market Committee) meeting, and is a key tool in advising the members on changes within the economy since the last meeting.
The Beige Book is not a collection of statistical data. It is a compilation of anecdotal information from each of the 12 Federal Reserve Districts. It is based on interviews with local business people and academics surveyed about their region's economic health.
Essentially, the Beige Book is a compilation of data gathered from each District within the Federal Reserve and is a mixture of anecdotal evidence on current economic conditions in the district gained through reports from various bank directors and interviews with economists and market experts along with other sources.
The Beige Book report presents this information in the form of summaries by both district and sector.
Two weeks before each FOMC meeting, the Fed releases the Beige Book so-called due to its tan cover.