Instant view: Fed to hold post-FOMC media briefings

Reuters News
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Posted: Mar 24, 2011 3:14 PM
Instant view: Fed to hold post-FOMC media briefings

NEW YORK (Reuters) - Federal Reserve Chairman Ben Bernanke will hold media briefings four times a year in a historic shift to greater openness at the traditionally secretive U.S. central bank.

KEY POINTS: * Bernanke will hold a rare question-and-answer session with reporters on April 27 following a regularly scheduled two-day meeting Fed meeting on monetary policy, the Fed said on Thursday. * It is the first regularly scheduled briefing by a Fed chairman in the history of the central bank. * Further briefings will coincide with Fed meetings at which officials provide their quarterly economic forecasts, which fall in June and November this year. * "The introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve's monetary policy communication," the central bank said in a statement.

COMMENTS:

LOU CRANDALL, CHIEF ECONOMIST, WRIGHTSON ICAP, JERSEY CITY, NEW JERSEY:

"One of the problems the Fed has right now is that the statement is so terse that it's very difficult to use that to convey nuanced policy views and this will actually give the FOMC the chance to be a little less guarded in the way it writes the initial statement in that it can clear up any nuances in how different aspects of it should be interpreted.

"Right now, the typical market commentary on the statement is significantly longer than the statement itself, and that is not a good thing. Bernanke is likely to be able to focus attention--it will be interesting to see if the statements in non-press conference meetings feel very different from the statements at press conference meetings.

"There are cases where more clarity just means that the market has a more unified reaction and that is something that the Fed has decided it's going to accept as it moves toward more clarity

"Yes, this certainly at times could lead to sharper moves in the market but that's something the Fed accepts. The point of this is to provide more information, and more information at times drives more market movement.

"Bernanke's been looking for ways to speed up the communications about the Fed's policy views since the Beijing of his tenure and the ECB demonstrates that press conferences can be done and that, I think, opened the door as a natural progression in the Fed's efforts to be not just more clear but more nuanced."

KEVIN FLANAGAN, CHIEF FIXED-INCOME STRATEGIST MORGAN STANLEY

SMITH BARNEY:

"The Fed's goal is to open the lines of communication. I'd lean in the direction that it would be more like Trichet's press conferences. These conferences will occur only four times a year, which is after just half of the meetings.

"I don't necessarily think Chairman Bernanke would give up anything more than what was mentioned in the policy statement. One way we could benefit is that if the market misinterprets the policy statement, Bernanke would have a chance to clarify the committee's intentions. I think it's procedural, rather than market-moving.

"While it does give Bernanke an opportunity to clarify any market misinterpretation of the policy statement, it also opens the door to misinterpretation of what he says. He's still going to be very careful. It could just be similar to his Congressional testimony which typically rehashes ideas that have already been discussed by the policy committee. You don't want the press conference to create more uncertainty."

JOSH STILES, BOND STRATEGIST, IDEAGLOBAL, NEW YORK:

"I can imagine that the Fed is going to be very careful about what they say on top of the statement. They will probably have all kinds of rules and regulations so I am not totally convinced we are going to learn a lot more from these press conferences. People will try to figure out if it means they are going to raise rates or not, and how is the Fed going to clarify that apart from the statement?"