As Econowatch readers probably already know, yesterday marked a historic event in Federal Reserve annals: Ben Bernanke fielded questions from reporters in the first of what will now be regular meet-the-press events to be held four times a year.
The general consensus among the 60-something journalists the Fed managed to fit in the top-floor conference room of its Washington headquarters was that Big Ben managed an impressively unremarkable performance. There were no slips of the tongue, and absolutely no novelties.
Bernanke “mostly retraced familiar ground,” wrote the New York Times’ Binyamin Appelbaum. He “avoided saying anything yesterday at his first press conference that shocked or confused investors. In other words, economists said, his appearance was a success,” quipped Scott Lanman and Steve Matthews, reporting for Bloomberg.
The market’s reaction, in fact, was contained, even though news that the Fed would continue with its $600 billion bond-buying program until June, as planned, caused a surge in gold and silver prices, and weakened the dollar.
As some reports noted, this is one more step in Ben’s crusade to make the Fed more transparent, debunking the myth that a central bank that dares to go public on the economy will cause mayhem in the markets. As Businessweek notes, some of that was already happening under Alan Greenspan in the late 1980s, when the Fed began releasing statements when policy action had been taken, and again in 2000 when it took to issuing statements after every Federal Open Market Committee meeting. Now, the new post-meeting pressers, which are akin to the regular conferences that the Bank of England, the Reserve Bank of New Zealand, the Bank of Japan and the European Central Bank already hold, should help make the Fed’s decisions even less of a surprise than they usually are.
Many noted that the chairman was also playing spin-doctor. Those 46 minutes in front of the cameras allowed Bernanke to get his message out, and to explain to the American public how he is juggling the Fed’s double mandate of maximum employment and low inflation. “While it is very, very important to help the economy create jobs and help to support the recovery, I think every central banker understands that keeping inflation low is absolutely essential to a successful economy, and we will do what we can to make sure that happens,” he said. However, he reiterated his well-known position that the recent food and energy price hikes are temporary, and won’t affect core inflation.
But as The Wall Street Journal’s Sudeep Reddy live-blogged from the conference room, the tone of the presser was as jargony and soporific as that of a Congressional hearing–minus, of course, the rather entertaining ranting by lawmakers. One has to wonder then, whether these meetings will really establish a magic connection between the Fed and the common man. And as far as those in the public who have even a minimal interest in and understanding of monetary policy, inflation and public debt have become such polarizing topics that Bernanke’s words are highly unlikely to sway anyone one way or the other.
From a “managing the message” perspective, then, the true impact of these press conferences will be on the power balance within the Fed. They are a great tool for the chairman to get his message out, and obscure dissonant voices coming from hawkish regional governors.