Only the Pope guest-hosting Saturday Night Live could top, in public-relations terms, what just happened in Washington — Fed Chairman Ben Bernanke gave a press conference, the first time a Fed chair has stood before reporters to take questions. And maybe Benedict XVI should film an Internet intro to St. Peter’s, since Bernanke just posted an intro to the Vatican of money.
And what a press conference! It began exactly on time. The mood was sedate, the questions softly spoken and polite. Bernanke didn’t take the bait when a reporter asked what he thought of “many economists” calling Fed policy ineffective; there was no snarky follow-up. Recent presidents could only dream of presiding over such a respectful press conference.
Traditionally, Fed chairs have spoken in public only to read a prepared speech — often, cloaked in mumbo-jumbo — or to present congressional testimony. Fed chairmen’s appearances before congressional committees have tended to be dominated by representatives and senators who want to hold the floor, and the cameras’ attention, as they engage in long-winded self-flattery. Sharp, concise questions of the sort asked by reporters are rare in congressional hearings.
Otherwise, Fed chairmen have cultivated an aura of secrecy, so much so that William Grieder’s 1989 book about the Fed was titled, “Secrets of the Temple“. Some believe that Fed chairmen cultivate a secretive air in order to mystify themselves; or because a high-and-mighty atmosphere helps the Fed function properly; or because they fear slipping up and revealing that they are not the super-ultra geniuses they’d like us to believe.
Now Bernanke is raising some of the curtain. Maybe he simply believes the Fed should be more accountable to the public — if so, more power to him. Asked today about ambiguity in Fed pronouncements, Bernanke replied, “the reason we use vague terminology is that we don’t know” what will happen next in the economy. He followed up later by saying he simply doesn’t know when “tightening” will occur because he doesn’t know what course the economy will take. He said “everybody who reads the newspapers” knows about the same information the Fed knows. This is admirable honesty from an institution with a tradition of pretending to be oracular.