The Fed and Transparency

Have Federal Reserve Chairman Ben Bernanke and his merry band of policymakers been clear enough, or even too clear, about the Fed’s plans?

As you probably know, the Fed left short-term rates unchanged at the meeting it concluded on Wednesday. In the accompanying policy statement, the Fed basically said very little different from June.

The upshot: They’ll cut their bond purchases when they get good and ready – that is, when the economic data tell them it’s safe to do so. That basically means consistent economic growth matched by steady jobs growth and a decline in the unemployment rate.

(Read More: Steady Fed: Printing Presses to Keep on Rolling)

Call me old fashioned, but I grew up covering financial news under the Fed Chairmanships of Paul Volcker and Alan Greenspan. They said little, tipped their policy hand almost never. In fact, when Alan Greenspan wanted to send a signal, it was often phrased in such cryptic, prolix way that, well, he might as well have said nothing.

Nowadays, the Fed gives a lengthy statement after each meeting. The chairman holds several press conferences a year, and he and the Fed governors and bank presidents give speeches or testimony practically every week.

(Read More: Yellen Is Wall Street’s Pick for Fed Chair, Pro Says)

There’s a lot of transparency from today’s Fed. What Bernanke’s been saying seems pretty clear to me. And yet there are critics and commentators who are impatient with him and want him to pin down the exact date, time and pace of a slowdown in bond purchases.

(Watch: Fed Has to Take Off ‘Training Wheels’: Strategist)

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  1. Ross Stone says:

    At what point will the Fed stop buying bonds and start selling them back? Will they wait until the dollar is no longer trusted at it’s propped up value and the world finds an alternate currency or even returns to gold? As a person resently retired, should the interest rate on my conservative bond investment really be 2%? Where is the balance we once had where balancing bonds against stocks would off-set each other in changing financial times? At least that is an answer I can see…we (U.S.A)can’t afford where interest should be, so we manipulate the rate to zero so we don’t have to pay it. Do you know or does the Fed know how long we can get by doing this? I’m simply a man who is gambling that my 401k will last a life time. If I think the worst, there would never be a time when retirement would be prudent.

  2. Wazoo says:

    I’d like to see live coverage, like on CSPAN, of the FED meetings.

    Interpretation would still be up to the individual. Even if we know exactly what was said, will we know what was meant? I relate to your Greenspan comment.

    Broadcast rights could be sold and revenue used to fund the consumer finance protection agency.

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