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.
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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.
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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.