By Craig Torres
Nov. 15 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke's decision to publish more details about the outlook for economic growth and prices represents a break with the legacy of Alan Greenspan and the cryptic phrases he used to signal policy.``If you haven't thrown out your Greenspan decoder ring by now, you should,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc., a former head of domestic research at the New York Federal Reserve Bank. ``Ben Bernanke is a very straight shooter. He tells it like it is. There are no hidden messages.''
Bernanke said yesterday that Fed officials will add a third year to their forecasts and double the frequency to once a quarter. The reports will give investors and companies more details on why interest rates were adjusted and offer a map for where they are likely to go.
Analysis will shift to how the committee sees the outlook, away from trying to guess where the chairman stands, as was the case during Greenspan's 18 years at the helm, Fed-watchers said.
``He wants the committee to function like a committee,'' said former Fed Vice Chairman Alan Blinder, now a professor at Princeton University in New Jersey. ``He doesn't want to dictate.'' Greenspan declined to comment.
Bernanke's forecasting overhaul brings the Fed closer to international central-bank practices and comes at a time of diverging views between policy makers and investors.
Rate Expectations
Bernanke and other Fed officials have repeatedly underscored their confidence the economy will accelerate by mid- 2008 after a lull this quarter. That hasn't stopped traders from assuming the central bank will cut rates at least once more after lowering borrowing costs in September and October.
Futures markets show a 72 percent probability the Fed will cut the benchmark rate a quarter-point to 4.25 percent Dec. 11.
Bernanke, 53, took office in February 2006 having pushed for increased transparency when he served as a Fed governor. Yesterday's announcement was the product of his 1 1/2-year review of Fed communication, and it fell short of the formal inflation target that Bernanke advocated as an academic.
At the same time Bernanke spoke on the changes, the Federal Open Market Committee released a statement detailing the new practices, illustrating that the decision was made jointly among policy makers.
`Diversity of Views'
Bernanke praised the ``diversity of views'' among the 12 district-bank presidents and seven Fed governors, who discuss rate decisions at FOMC meetings. He said the range of opinions ``serves to limit the risk that a single viewpoint or analytical framework might become unduly dominant,'' a frequent criticism of Greenspan's chairmanship.
The Fed chief also took questions from the press after his remarks yesterday, another break from Greenspan, who avoided public exchanges with reporters.
In his speech, Bernanke framed transparency as critical to the central bank's ``democratic legitimacy'' with the public, Congress and financial markets -- constituents that critics say the Fed hasn't always served in a balanced way.
``If he wants to translate the dynamics of what makes the economy change in a language that ordinary people can understand, I think that is sensational,'' said William Greider, author of the 1987 book Secrets of the Temple, which described the Fed's secretiveness as ``the crucial anomaly at the very core of representative democracy.''
Greenspan Continuity
Bernanke did note continuity with Greenspan's incremental steps. The central bank first began announcing rate changes in 1994 and later issued statements after every meeting. Greenspan also oversaw a speeding up of FOMC meeting minutes releases, to a three-week lag instead of six.
The more-frequent outlooks will bring the Fed in line with the European Central Bank and counterparts in the U.K., Sweden and New Zealand, which publish quarterly projections. The Bank of Japan puts out a twice-yearly report.
Bernanke indicated yesterday was a first, not final, step in his efforts. The Fed still trails other central banks in openness in access to the media, as the Fed chairman doesn't give on-the-record interviews or press conferences.
Bernanke put Vice Chairman Donald Kohn, a former Greenspan adviser who was at odds with the chairman's views on the merits of inflation targeting, in charge of the communications project. The decision insulated the committee from the chairman's direct influence, with San Francisco Fed President Janet Yellen and the Minneapolis Fed's Gary Stern being the other members.
Forecast Dates
Fed officials will release their quarterly forecasts in minutes of FOMC meetings in January, April, June and October. The publications will include commentary on officials' thoughts about the risks to their projections, Bernanke said.
The first new predictions come Nov. 20, offering investors a glimpse of the Fed's most recent reading on the economy three weeks before it meets.
``This is depersonalizing monetary policy,'' said Vincent Reinhart, former director of the Fed's monetary affairs division, who worked with Bernanke on the plan and is now at the American Enterprise Institute in Washington.
``When he talks about the outlook, it is going to be the him talking about the committee's'' forecasts, he said, referring to Bernanke. ``Greenspan's testimony almost never referred to those numbers. It was his outlook.''
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