The U.S. Federal Reserve today (Wednesday) will hold its first-ever press conference - an extraordinary development that has generated more buzz than typically surrounds a Federal Open Market Committee (FOMC) meeting.
But many wonder, will U.S. Federal Reserve Chairman Ben S. Bernanke deliver clear-cut explanations, or a script of "Fedspeak"?
Bernanke will start the Fed press conference at 2:15 p.m. EDT after the two-day meeting of the Federal Open Market Committee (FOMC). The agenda includes a review of the Fed's economic projections and the FOMC's policy decisions, which will be released in a policy announcement at 12:15 p.m.
Then - the part everyone is really waiting for - Bernanke will field press questions for about 45 minutes.
No doubt the press has a list of burning questions for the Fed chief, including:
- When will interest rates be raised?
- Has quantitative easing done anything to boost economic growth?
- Do you still believe inflation is "transitory"?
- And what else will be done to support the economic recovery?
The first-ever Fed press conference is a big deal not only because people want to hear how Bernanke answers these questions, but because he's willing to field them at all.
Fed-watchers and investors usually have to scrutinize every word of the Fed's press statement to figure out what market moves to make. But increased demand for Fed transparency in the wake of the 2008 financial crisis has changed that.
This new quarterly press conference format could mark a historic change in Fed behavior, lifting the veil on the Fed's decision-making.
"The Fed has an opportunity in the press conference to explain its strategy and the reasoning far, far more completely than it ever could in the policy statement," said former Federal Reserve Bank of St. Louis President William Poole.
Or, it could be little more than Bernanke repeating technical lingo for 45 minutes, leaving the press and investors with no more guidance than if they read a carefully worded statement. Some analysts expect Bernanke will keep as tight-lipped as possible so he doesn't say anything to rattle the markets.
Either way, the Fed will face an incredibly curious group of media, eager to be satisfied by this chance for clarification - and they could be easily disappointed.
"The Fed may have ended up setting up high expectations - not just for transparency but for clarity when there is a huge amount of uncertainty with respect to how this recovery is going," Fed watcher David Jones of DMJ Advisors told MSNBC.
This brings us to next week's Money Morning "Question of the Week": After you watch today's Fed press conference, what do you think about the outcome? Did the press ask the questions you wanted them to? What do you think about Bernanke's answers and the actions the Fed is taking? Do you like the new press conference format and see any value from it?
We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate - via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- Money Morning:
The Death of the Dollar: Will the Fed Kill the Greenback at Tomorrow's FOMC Meeting? - MSNBC:
With economy at crossroads, Bernanke lifts the Fed's veil - NPR:
Why Bernanke's Press Conference Matters - Money Morning News Archive:
Question of the Week Feature