“I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers.”
So wrote Ben Bernanke, chairman of the Federal Reserve from 2006 until last year, and now an economist at the Brookings Institute, as he launched a new blog today.
“I hope to educate, and I hope to learn something as well.” —Ben BernankeDespite the major economic stimulus packages launched by the Fed under Bernanke’s watch—which included three rounds and trillions of dollars of quantitative easing—he stated in his inaugural post that “monetary policy is 98% talk and only 2% action.”
“The ability to shape market expectations of future policy through public statements is one of the most powerful tools the Fed has,” Bernanke wrote. “The downside for policymakers, of course, is that the cost of sending the wrong message can be high. Presumably, that’s why my predecessor Alan Greenspan once told a Senate committee that, as a central banker, he had ‘learned to mumble with great incoherence’.”
It is a message known all too well by his former colleagues at the Fed. In its most recent statement, commentators latched onto the removal of the word “patient” compared to previous statements, a move that was initially taken to mean a rate rise was likely by the summer.
Bernanke’s claim that his words would not be “put under the microscope” may be wishful thinking: former Bank of England Governor Sir Mervyn King’s views are still covered in great detail by the financial press despite having handed over the reins to Mark Carney in 2013.
Fed watchers and Bernanke fans alike will hear from the former Fed chairman “periodically, when the spirit moves me.”
“I hope to educate, and I hope to learn something as well,” Bernanke wrote.
“Needless to say, my opinions are my own and do not necessarily reflect the views of my former colleagues at the Fed,” he concluded.
The blog is available on the Brookings Institute’s website.