Fed chairman to hold first ever news conference

Federal Reserve chairman Ben Bernanke will hold a news conference on Wednesday, the first time the Fed has held such an event for the business media, reports Kevin Hall of McClatchy Newspapers.

Hall writes, “Communicating those policy changes will present Bernanke with some public-relations challenges, probably later this year, so Wednesday is an early rollout to work out the kinks.

“‘When they start tightening, they will be using a novel instrument’ in the news conference format. ‘You don’t want to start (news conferences) when events are driving it. You have to establish precedent,’ said Vincent Reinhart, a former top economist on the Federal Open Market Committee. ‘What will the rules of the road be? How much follow-up will he allow? How much will he convey about the meeting? It could be 45 minutes of him rereading the (FOMC) statement. It could be very boring, or pretty interesting.’

“While news conferences have long been considered, Reinhart said, ‘the fact that they didn’t do it before means there had to be some costs associated with the benefits. The costs are mostly what do you do to the social dynamic of the FOMC.’

“The Fed chairman is first among equals on the board of governors, and as the first speaker at monetary policy meetings, he frames the choices in play. The chairman’s power will grow with his news conference visibility, while other participants aren’t permitted to speak until the Monday after a FOMC meeting.

“Reinhart, who’s now a scholar at the American Enterprise Institute, a conservative policy-research group, is skeptical of this step’s value. He thinks that publishing more staff reports and research would be a better option to communicate Fed policy objectives.”