The Federal Reserve needs to burnish its image, but press conferences aren’t entirely a public relations exercise.
For Fed Chairman Ben Bernanke, the emphasis on greater openness predates the financial crisis. After his notoriously cryptic predecessor Alan Greenspan, Bernanke has made the Fed more open and his own statements easier to parse.
Many economists, Bernanke included, believe financial markets function more smoothly when the Fed makes its intentions, and its expected reaction to twists and turns in the economy, crystal clear.
In fact, one of Bernanke’s early transparency initiatives, an explicit target for inflation, was shot down by Democratic Congressman Barney Frank who argued that since the Fed has a dual mandate to keep inflation in check but also promote maximum employment, setting an inflation target would focus too much on one side of that equation.
Nevertheless, Bernanke has slowly made Fed thinking more accessible to the public. Under his direction, the Fed published minutes of policy meetings after three weeks, instead of six.