This story in yesterday’s New York Times by Binyamin Appelbaum about how Federal Reserve Board Chairman Ben Bernanke now plans to hold regular press conferences about Fed policies and projections is actually far more interesting and important than is reported.
My sources in the Fed told me almost a year ago that, in the wake of the criticism the Fed was receiving about its handling of the financial crisis, Bernanke had made a decision to speak publicly more often and to a much wider audience than either the Fed or he had ever done before. I was told that Bernanke had decided that he was going to have to talk to the public one way or another and, rather than wait for a problem to occur and then have to defend his actions to an audience that hadn’t heard much from him directly, he preferred for the Fed to establish a rapport and talk proactively.
The story also misses one of the other key reasons Bernanke will be communicating more often and more directly to an audience most Fed chairs have essentially ignored: Voters. As I said in this post last August, Bernanke painted a big bullseye on himself and the Fed in his speech at Jackson, Wyoming, and Congress started to use him and it for shooting practice almost immediately after Election Day. To most voters, the Fed was just part of the federal bureaucracy and Bernanke was mostly known by how others characterized him. The press conferences are obviously part of a new strategy to correct this problem with Bernanke essentially going over the head of individual members of Congress and talking directly to their constituents.
As the Times story explains, the most obvious manifestations of this change in communications strategy so far have been the two 60 minutes interviews Bernanke has done. The press conferences will obviously be an even bigger step.