On Wednesday afternoon, Ben S. Bernanke will step in front of a lectern in a space across the hall from the Federal Reserve cafeteria and make history: He will be the first Fed chairman to take routine, on-the-record questioning from the media.
The advent of quarterly news conferences is the latest step in the Fed’s long (and slow) process of becoming more open about its monetary policy actions. As recently as 1994, the nation’s central bank didn’t even announce when it changed its interest rate target after policy meetings. Fed watchers had to intuit those moves based on financial market activity.
Larry Hatheway, chief economist for UBS Investment Bank, talks about the outlook for economic growth in the U.S. and interest rates. He speaks with Maryam Nemazee on Bloomberg Television's ‘’The Pulse.’’(April 26)
The traditional model for the world’s central bankers — the men behind the curtain, turning the dials of the money supply in private, neither seen nor heard — has been upended around the world. The European Central Bank, the Bank of England and other world banks have been holding news conferences for years.
Fed leaders decided over the past few months that whatever advantages the board may have gained by keeping quiet — maintaining a certain mystique and flexibility in future policy — are now outweighed by the board’s need to polish its public image. The Fed has come under repeated attack by members of Congress in the past two years, in part for its perceived secretiveness.
Bernanke will open the news conference with the Fed’s latest economic forecast and after the Federal Open Market Committee releases its statement in which it is likely to affirm a low-interest-rate policy and indicate that a $600 billion bond-buying program will expire in June.
Here’s what to expect from Bernanke’s first public news conference in comparison to his past public appearances.
• More pointed questions. When Bernanke testifies before congressional committees, his questioners more often use the opportunity to give a mini speech than to get actual information from the Fed chairman. Expect reporters to ask shorter, more focused questions that would be harder for Bernanke to evade (or at least would make it more obvious if he did evade).
• More financial questions. Bernanke’s usual audiences tend to stick to broad questions about Fed policy. On Wednesday, many of the questions are likely to address key issues on the minds of people in financial markets, such as what might trigger the Fed to raise interest rates or announce more monetary easing or how the Fed plans to exit from its easy money policies.
• Fewer redundant questions. When audience members question Bernanke after a speech, he often winds up answering the same queries he has addressed in other forums. Reporters who cover the Fed are well versed in the chairman’s previous speeches and testimony and will try to frame their questions to glean a more novel response.