Fed Chairman Ben BernankeWin McNamee
Well, this should be fun.
The Federal Reserve announced Thursday that Chairman Ben Bernanke will now hold press conferences once a quarter following the release of the Fed's latest economic projections and to "provide additional context for the [Federal Open Market Committee's] policy decisions."
It doesn't sound like much, but this a monumental shift in the Fed's communications strategy.
As a matter of course, European Central Bank President Jean-Claude Trichet holds a press conference after each policy decision, and Bank of Canada Governor Mark Carney confronts reporters after each Monetary Policy Report, which is released quarterly. But the Fed's rule was to keep the chairman under wraps. He would make speeches, and occasionally take questions from members of the audience. But rarely has the Fed decided to put the chairman in front of a group of people hell bent on making him move markets.
"The introduction of regular press briefings is intended to further enhance the clarity and timelines of the Federal Reserve's monetary policy communication," the Fed said in a press release.
The first press conference is scheduled for April 27, to be followed by briefings on June 22 and Nov. 2. The events will be broadcast live on the Fed's website starting at 2:15 p.m. (ET). The FOMC's statements on those days will be releases at 12:30 p.m. rather than the typical 2:15 p.m.
Quantitative easing has made communications an important topic at the Fed. Officials have struggled to maintain confidence in the $600-billion (U.S.) asset-purchase program announced in November amid heavy criticism. With long gaps between public appearances by Mr. Bernanke, opponents were allowed to fill the void. A press conference will allow Mr. Bernanke to set the tone of the debate, rather than ceding that opportunity to the Fed's critics.
"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," Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, said in a research note. "In addition, it could cut down market volatility if Bernanke is quickly able to correct any wrong interpretations in the markets about the message that the FOMC is trying to get across in the statement."
The Fed's version of glasnost might take some getting used to. For years, analysts and journalists were forced to interpret what the Fed chairman was thinking without ever getting to ask him. Some might even have liked it that way.
It's a brave new world now.
"The question is where will it all end?" Mr. Ashworth asked. "A live @FOMC twitter feed from within the meeting perhaps."