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Bernanke to brief press on regular basis
Policy change follows criticism board is secretive during crisis
Federal Reserve Chairman Ben S. Bernanke will begin holding news conferences four times a year to answer questions about the Federal Reserve’s policy decisions. It represents a significant shift in strategy for the central bank, one that will give it a chance to defend actions that in recent months have faced harsh criticism.
The decision, which was announced Thursday, came after the Fed held an unusual video conference last fall in large part to discuss the need to improve its communications with the public. A Fed committee also had been studying whether to begin holding periodic news conferences.
Mr. Bernanke’s first news conference will take place after the Fed’s April 27 meeting. That will augment the current communications strategy: a brief statement released after each of the Fed’s eight policymaking meetings, with no officials available to answer questions.
It’s a notable change for the Fed. Its chairmen rarely take questions from reporters, and when they do, they often are guarded in their answers. The Fed chief’s words are closely watched by investors and have the potential to move markets around the world.
But the central bank has faced tough criticism, primarily from Republicans, for being too secretive and failing to provide timely information on its actions during the 2008 financial crisis. In recent months, lawmakers also have questioned the Fed’s decision to boost the economy through the purchase of $600 billion in Treasury bonds.
Mr. Bernanke has responded to the criticism by giving interviews with “60 Minutes” and holding a rare news conference at the National Press Club last month. Regular news conferences would be a marked change.
The statement said the Fed would continue to review its communications practices “in the interest of ensuring accountability and increasing public understanding.”
Until 1994, the Fed did not even announce the outcome of its discussions. Wall Street investment houses employed an army of “Fed watchers” who would monitor the central bank’s daily actions in the bond market to search for clues as to whether the Fed was raising or lowering interest rates.
The Fed began issuing statements at the end of every Federal Open Market Committee (FOMC) meeting in 1999. Between 1994 and 1999, it issued a statement only if the Fed had changed its key interest rate.
Economists said the decision represented one more incremental step toward a more transparent Fed. The European Central Bank, which sets monetary policy for countries using the euro, has been holding news conferences for a number of years.
“This is a further shift to a more open communications strategy. It has no implications for the future path of monetary policy,” said Paul Ashworth, chief U.S. economist at Capital Economics. “At the margin, it is possible to argue that this will give the chairman even more power because he will be able to put his own spin on FOMC statements.”
The move was not universally hailed.
“Expectations are a very important part of monetary policy,” he wrote in a blog post Thursday. “In a live news conference, there’s a lot that could go wrong, and I see relatively little upside.”
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