Earlier this week, the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution hosted “A Fed duet: Janet Yellen in conversation with Ben Bernanke” (February 27, 2018). Video, audio and a transcript are all available here. I’ll focus here on a few of Yellen’s comments that caught my eye.

For those not familiar with her career, Janet Yellen was a well-known UC-Berkeley economist in the 1980s and into the 1990s, when her career took a turn toward government roles. She was a member of the Federal Reserve Board of Governors from 1994-97; Chair of Clinton’s Council of Economic Advisers from 1997-99; President of the Federal Reserve Bank of San Francisco from 2004-2010; Vice-Chair of the Fed from 2010-2014, and then Chair of the Fed from 2014-2018. In short, she’s had a front-row seat for US economic policy-making for most of the last quarter-century.

Building Consensus as the chair of the Fed. The Federal Open Market Committee, the policy-making part of the Federal Reserve, doesn’t literally operate by consensus. But there has traditionally been an effort to try to build at least a rough consensus, and members have often been willing to coalesce behind a policy option that they found acceptable, even if it wasn’t necessarily their first choice. Yellen describes her process of managing these meetings in this way:

“And initially, at meetings we would have a lot of options on the table and there would be go-arounds and people would express their views. The options–there were people who would favor options that didn’t get a lot of support and they would tend to see that. You know, I love Option Number 9, but I was pretty much alone in doing that. And what I found was it was great. Over time people who favored options for which there wasn’t a lot of support tended to shift their support to options where there was greater support. And gradually, we narrowed things down to one and got complete agreement.