Fed bets press briefings to bring clarity, not volatility

WASHINGTON: Federal Reserve chairman Ben S Bernanke is betting that by holding regular press conferences he'll provide clarity about monetary policy without saying something that may disrupt financial markets.

The Fed said on Thursday that Bernanke will begin holding four press briefings a year. The first sessions in April and June will give Bernanke an opportunity to discuss his next steps after completing the record stimulus from the purchase of $600 billion in Treasury securities through June.

Bernanke is trying to dispel concerns from investors, lawmakers and the public that the second round of so-called quantitative easing, or QE2, is inflationary and ineffective in spurring growth. He said last month that officials were weighing the benefits of greater transparency against the risk that remarks are "misinterpreted" and trigger "unnecessary volatility" in financial markets.

"If we were to have a person that was unskilled in this trade, it might not succeed, it might end up backfiring," said former Fed Governor Lyle Gramley, now senior economic adviser with Potomac Research Group in Washington. "But I think Bernanke is a very skilled guy in communications. He will do a good job."

While press conferences were unthinkable for central bankers three decades ago, the Fed's recent resistance had set it apart from peer institutions. European Central Bank President Jean-Claude Trichet and Bank of Japan Governor Masaaki Shirakawa each hold one after every policy meeting, while Bank of England governor Mervyn King speaks once a quarter. Bank of Canada governor Mark Carney also holds regular briefings.

Longstanding Trend

The decision is an effort by the central bank to catch-up with a longstanding trend, said Gregory Hess, a former Fed researcher who is now an economics professor at Claremont McKenna College in California. "This bus left the station maybe 10 years ago," Hess said.

The press conferences will be broadcast on the Fed's website and coincide with the Federal Open Market Committee meetings when officials update economic projections, allowing Bernanke to present the figures three weeks earlier than prior practice. The first will be April 27 at 2:15 pm in Washington, the Fed said on Thursday. The FOMC's statement will be released at 12:30 pm on the days when Bernanke is speaking, instead of the usual time of 2:15 pm, the central bank said.

Clarity, Timeliness

"The introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve's monetary policy communication," the Fed said in a statement on Thursday. "The Federal Reserve will continue to review its communications practices in the interest of ensuring accountability and increasing public understanding."

A January global poll of 1,000 Bloomberg customers who are investors, traders or analysts found that a plurality of respondents, 35%, said the second.