Tales from the Trail

Bernanke and the media — Round One coming up

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.

Washington Extra – Ducking the issue

U.S. Treasury Secretary Timothy Geithner testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on The Treasury Department's Report on International Economic and Exchange Rate Policies on Capitol Hill in Washington September 16, 2010.

We were all primed for the release of the Treasury’s global currency report this afternoon, which would have included a ruling on whether China was a currency manipulator. But a decision was taken to delay the report until after the Group of 20 summit in Seoul in mid-November.

Pressure from lawmakers and business had been mounting on President Barack Obama to act, but the delay shouldn’t come as a big surprise. After all, Treasury Secretary Tim Geithner told Congress last month he wanted to rally the G20 around the issue and take a multilateral approach. Perhaps more importantly, the administration is conveniently ducking the issue until after the Nov. 2 congressional elections.

Some Democrats, who have made China’s currency practices an issue in their campaigns, are disappointed today. Our Breakingviews columnist James Pethokoukis says Obama should be given credit for resisting populist pressures for the second time this week, after also declining to heed appeals to impose a national moratorium on home foreclosures.