After Nervous Start, Fed's Bernanke Warms to Media Glare

Thursday, 28 Apr 2011 02:20 PM

 

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At first, Ben Bernanke looked slightly ill-at-ease as he addressed reporters, sitting bolt upright in his chair on a raised platform under the glare of television lights.

But as the first ever news conference held after a Federal Reserve monetary policy meeting got underway the chairman grew more comfortable.

In the end, his sober, often professorial style earned praise from Wall Street which was glued to television broadcasts of the question-and-answer session held in a low-ceiling room at the Fed's headquarters in Washington D.C.

"By the time he got to the last questions, he came across as extremely comfortable, confident and in full command of the facts," said Mohamed El-Erian, co-chief investment officer at PIMCO, the world's largest bond fund.

Bernanke never looked quite as easy in his chair as his European Central Bank counterpart, Jean-Claude Trichet, who has been giving ECB news conferences since 2003. Trichet often enters into banter with reporters, and calls on them by name.

Bernanke was more stilted, relying on his spokeswoman to invite reporters to ask their questions in rapid fire, with only two reporters asking follow-up questions.

The nearly hour-long briefing began with a 10-minute summary of the Fed's policy statement and economic projections which were released before Bernanke spoke.

The Fed chairman used the opportunity to flesh out Fed thinking. Take-aways: The Fed is in no rush to raise interest rates, and the first step towards tightening could be letting its balance sheet shrink as maturing securities roll off.

"Perhaps more important than what was said is what was not said. In no way did Bernanke begin laying the groundwork for a near-term reversal in monetary policy," RBS analysts wrote in a note to clients.

A snap Reuters poll of eleven analysts gave the Fed chairman a median grade of A- for his performance.

The Fed had moved only cautiously to adopt the news conference format many other central banks already employ. Any misstatement by a Fed chief, no matter how small, could send markets reeling.

Bernanke, who has tried to make greater transparency a hallmark of his chairmanship, stayed calm and on message, and markets took note.

There were no "misstatements or stumbles. I think he served the Fed well by projecting an air of competence and accessibility," said David Joy, chief market strategist at Columbia Management in Boston.

But his performance did not win over all his critics. Axel Merk, president of Merk Investments, for one, was not impressed and said Bernanke struggled to speak smoothly on some occasions.

"Lots of 'ahems' -- appears that he has some explaining to do. Like a schoolboy, who handed in the wrong assignment," he said.

Others criticized Bernanke for seeming too rehearsed at times and evading some issues.

"I think he skates around some topics," said Phillip Streible, senior market strategist with Lind Waldock.

Asked to reflect on his first news conference, Bernanke smiled.

"It used to be that the mystique of central banking was all about not letting anybody know what you're doing," he said. "We have become, I think, a very transparent central bank."

© 2014 Thomson/Reuters. All rights reserved.

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