For Fed chief, no news makes for a successful day

By Paul Wiseman

Associated Press

Published: Wednesday, April 27 2011 4:35 p.m. MDT

Federal Reserve Chairman Ben Bernanke takes part in a news conference at the Federal Reserve in Washington, Wednesday, April 27, 2011.

Susan Walsh, Associated Press

WASHINGTON — The script was repetitive. The lines were delivered without emotion. There wasn't even a twist.

The reviews for Federal Reserve chief Ben Bernanke's unusual press conference Wednesday would have sunk a Hollywood blockbuster. As the head of the famously vague central bank, though, he nailed it.

"I would give the chairman high grades for his performance today," said Dana Saporta, an economist at Credit Suisse. "I was a little relieved."

In an hour-long give-and-take with reporters — the first press conference by a Fed chief in almost 20 years — a relaxed Bernanke delivered little new information and said nothing to spook investors who were hanging on every word.

"We paid attention," said David Ader, head of government bond strategy at CRT Capital. "But he didn't say anything we hadn't heard already."

Financial news channels pasted second-by-second charts of financial markets on the screen next to Bernanke's face as he spoke. Not much drama there either: The Dow Jones industrial average rose gently as the Fed chief spoke. It ended the day up 96 points at 12,691.

For Fed watchers, there were a couple of morsels. Bernanke decoded his frequent pledge to keep interest rates near zero for "an extended period." He indicated rates would stay at the record lows for at least the next two Fed meetings, or about three months.

He also seemed to rule out further major efforts to help the economy. Shortly before Bernanke started talking, the central bank announced that its $600 billion plan to hold down interest rates by buying government bonds would end as scheduled in June.

He suggested the Fed would be reluctant to start a new program. "The trade-offs are getting — are getting less attractive at this point," he said. "Inflation has gotten higher."

In the run-up to the first of what the Fed says will be quarterly press conferences, Wall Street held its breath, and the financial media speculated endlessly about how the Fed chairman might respond to unfiltered questions from the press.

Cameras whirred as Bernanke, wearing a conservative gray suit and a red tie, walked to a dark brown wooden desk, where he sat fielding questions like the college professor he used to be.

Bernanke said the news conference was a step toward his goal of making the Fed more open and accountable to the American public. He has given television interviews, spoken to reporters about his South Carolina upbringing and allowed cameras inside the Fed.

In 2008, some Americans directed anger toward the central bank after the financial crisis. The Fed bailed out crippled insurer American International Group and opened itself for emergency lending to investment houses, not just commercial banks.

Critics, including some lawmakers, ripped the Fed for being secretive. The institution is often misunderstood: It isn't bankrolled by the taxpayers but by what it earns from its huge portfolio of Treasury and mortgage securities.

Bernanke stuck close to the statement the Fed issued earlier in the day, saying it would keep short-term rates near zero and end the bond-buying program.

"The Fed likely judges this first press conference a success," said Michael Feroli, an economist at JPMorgan Chase. "Nobody was able to trip up Bernanke, who generally came across as poised and balanced. Market participants may not have learned a lot about where Fed policy is heading, but today's event was more about the Fed communicating to a broader audience than the market."

Fed chairmen had only held press conferences twice before. Paul Volcker had one in 1979, shortly after he was appointed by President Jimmy Carter, and Alan Greenspan held an impromptu session with reporters in 1992.

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