Never before has so much been said about someone who is likely to say so little. On Wednesday, Chairman Ben Bernanke is holding the Federal Reserve’s first-ever post-policy meeting press conference, a news event in itself as the Fed prepares to become more transparent and help boost the public opinion of an institution that has come under fire for its handling of the economic crisis. Bernanke will take questions directly from reporters (something that central bankers across Europe, England and Japan already do) and do so four times a year after selected policy meetings, something no Fed chairman has done before.
When it comes to leadership, more transparency is almost always a good thing. But will it be for the Fed? Investors hang on Ben Bernanke’s every word, and one slip of the tongue could send the markets reeling. A little bit of uncertainty, if not too much, helps the market—too much clarity and investors could overcorrect.
But I’d argue there’s another potential downside to the event. By departing so radically from traditional Fed practice, Bernanke and Co. may be setting up expectations that are only likely to fall. Reporters are already dreaming up the perfect question that could force Bernanke off script. They’re being pressed, understandably so, to hold him accountable for issues like unemployment. Goldman Sachs is calling the event a “watershed” moment that could provide “significant market-moving information.”
Let’s hope no one leaves the place disappointed. But many could be frustrated by what will likely be Bernanke’s expert communication maneuvers, including everything from using opaque language to deflecting questions and simply respond with the answers he wants to give. (If ever there was an event that has been subjected to endless media training, it is this one.) While some reporters may be prepared for such obscurity, others may leave frustrated that the Fed’s supposedly newfound appreciation for transparency didn’t leave them with much new information. And that, of course, doesn’t always help them write stories when they get back to their desks that will boost the image of the Fed among the public.
I’m getting ahead of myself, of course. Bernanke could very well navigate the tricky path of not revealing too much while shedding enough new light on his thinking to leave reporters feeling satisfied. But it won’t be easy to do: the stakes of slipping up are extremely high, and the possibility that enough new insights are shared is unlikely at best.
Bernanke’s news conference, in a sense, is the perfect example of both the promise and peril of symbolic leadership gestures, which some are calling the event. Sure, such acts can go a long way toward reminding your people or the public of how much you stand behind certain principles. But if there’s too much symbol and not enough substance, they can also do more harm than good.
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