Bernanke’s star turn may win over Fed critics

April 27, 2011

By James Pethokoukis
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

WASHINGTON — The curtain finally went up on Ben Bernanke’s one-man show. It was full of high drama. Just one flubbed line by the embattled star could have sent markets heading for the exits. And although the performance was impressive, Bernanke will need a long-running hit to make taking to the stage pay off.

Such theatrics are common in Europe, but the hour-long televised press conference by the central bank chief was a first for America. The press corps was so eager and twitchy before showtime that a cup of water placed on the lectern triggered the furious firing of camera shutters.

Bernanke entered stage left — costumed in a red-patterned tie — promptly at 2:15 p.m. and took a seat center stage. Act One pretty much stuck to the script, reiterating the day’s statement from the Federal Open Market Committee with some added economic projections.

But Act Two, the audience participation part of the show, was a little more entertaining. Bernanke was pushed to talk about the dollar’s level, reluctant territory for the world’s foremost economic actor. And attendees pressed him on the Fed’s role in higher commodity prices. Bernanke’s improvisational skills were limited. He pointed to the classics of supply and demand. But he provided some helpful notes on Fed statement phraseology, including explanations of how they are sometimes “purposely vague.”

In the end, it was a bit like “Waiting for Godot.” The excitement never arrived. Though he made QE3 seem less likely, Bernanke neither rattled nor reassured investors. But he also left Washington’s political status quo in place.

His denial of guilt in rising headline inflation is sure to further infuriate Republican critics, while Democratic ones will continue to believe he places far too high a priority on controlling prices rather than creating jobs. Indeed, Bernanke artfully dodged a question about just what he considered to be strong employment growth. Will the public now view the Fed as more open? Probably, but phrases like “mandate-consistent levels” won’t play well in the cheap seats.

Most shows need previews to work out the kinks. Wednesday’s debut will be a good rehearsal for Bernanke’s soliloquy when the Fed finally decides to change its policy. That’s when the real reviews will come in.

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