Ben Bernanke Speaks: How Did He Do?
In 1963 The Beatles made history with their appearance on The Ed Sullivan Show. In 1969 man first walked on the moon. Then, for a long time, nothing much happened...until today. Mark the date, April 27, 2011: Federal Reserve Chairman Ben Bernanke gave the central bank's first-ever press conference following a rate-policy committee meeting.
According to ample pregame analysis by the likes of the WSJ, NYT and CBS MoneyWatch.com's own Carla Fried, Bernanke's "first foray into monetary policy glasnost [was] widely anticipated as an opportunity to hear the Fed chairman expound on the famously cryptic statements issued by the FOMC." But Carla also warned that his goal was to not make news.
And by that measure, he hit the ball out of the park.
For the record, the FOMC's policy statement remained essentially unchanged, if a bit more downbeat -- so no big surprise there. As for the early notices on Bernanke's debut performance, it lacked much in the way of substance, but he still delivered a pretty decent show. Not Death of a Salesman good, but not Spider Man: Turn Off the Dark, either.
True, the Fed chief could have seemed more relaxed, apparently. He wasn't visibly drunk, teetering with a Charlie Sheen goddess on each arm, but it does seem Bernanke could have comported himself with a bit more assurance, noted Dave Kansas, blogging at WSJ:
Some commenters have asked if Big Ben's voice is shaky or quavering. I think that was the case early in this first-ever event. But he seems to have found his stride a bit better as the conference has droned forward. In terms of body language, he has crossed his arms a couple of times and he looks skyward from time-to-time to grab for the convoluted verbiage that is the hallmark of a Central Banker.And in case you're a trader scared witless about the imminent demise of QE2 (the market's ascent, after all, has correlated nicely with the expansion of the Fed's balance sheet), Bernanke tried to soothe your anxious nerves, blogged MarketWatch's Rex Nutting:
The Fed will continue to reinvest the proceeds of maturing securities it owns even after it stops buying new securities at the end of June, Fed chief Ben Bernanke says. This means the Fed's balance sheet will remain very large for some time after its QE2 program concludes.But perhaps the biggest question lingering after this inaugural event is how the Fed chief's new policy of meet the press will force him to make pronouncements about things central bankers would rather leave unsaid, notes FT.com:
Openness is commendable, but -- as in Gorbachev-era Russia -- increased transparency could have unintended consequences...Traders will have to relearn deeply ingrained habits. Parsing the FOMC's statement, of 150-odd words, is a skill that will go the way of cold war Kremlinology or programming in Cobol...The question time also risks Mr Bernanke confronting political questions: about the dollar (at a post-crisis low on a trade-weighted basis), the US credit rating (under threat) and politicians (logjammed over fiscal policy). Any hint of a political view would roil markets.So what, ultimately, did we gain from this new era in FOMC transparency? As expected, not a heck of a lot. Floyd Norris of The New York Times probably best sums up what we can take away from Bernanke's first-ever presser:
What did he accomplish? To those who follow his views, there were no surprises. He always sounds like a calm professor, and he did so again. This man does not have a future as an inspirational speaker.
I might have liked to see a little more willingness to address the limitations of Fed power, and the need for a fiscal policy that will not strangle growth. He did emphasize the need to deal with the budget over the "long term," which might or might not be a subtle way of warning about cutting too soon.I am sure others were unhappy that he did not sound more alarmed about deficits and inflation.