Do federal reserve bank presidents have a regional bias?

- We test the regional bias hypothesis for the Federal Reserve.
- We use real-time data and interest rate preferences from the transcript.
- Taylor-type rules are estimated for each Federal Reserve Bank.
- Preferences of the Presidents in few districts were subject to a regional bias.
- The Federal Reserve set interest rates with a nationwide focus.

This paper examines whether the monetary policy deliberations of the FOMC have been influenced by regional considerations. We explain individual interest rate preferences by district, and use real-time data to estimate Taylor-type rules (sample 1990 to 2008). In line with the literature, this paper confirms that regional variables are explanatory factors of the interest rate preferences of most Reserve Bank Presidents. A new finding is that only few Reserve Bank Presidents display a regional bias in their interest rate preferences. Given their nature and size, these biases did not impede on the Fed's capacity to set interest rates with a nationwide focus.