“It doesn’t do the chairman any good to have everyone sit around the table and tell him how smart he is” and that his policies are the right ones.
The chairman in question is Ben Bernanke, leader of the U.S. Federal Reserve. The speaker is James Bullard, president of the Federal Reserve Bank of St. Louis, who spoke today with a group of reporters and editors from Dow Jones Newswires and The Wall Street Journal.
The quote was a partial response to a question from this columnist, who offered the notion that Bullard seemed to be the pre-eminent member of a small club of central bank policy makers who have lately spoken more forthrightly on pertinent issues, such as quantitative easing, than is the tradition among central bankers.
Late last year, we referred to Bullard as a breath of fresh air for that very practice. And the recently installed president of the Federal Reserve bank of Minneapolis, Narayana Kocherlakota, sprinkled a recent speech with provocative talk about structural problems in the U.S. labor market, among other issues. Meanwhile, the president of the Federal Reserve Bank of Kansas City, Thomas Hoenig, has become the lone serial dissenter, insisting the economy is healthy enough to survive merely easy monetary policy, rather than the emergency zero short rates that we have had for some one and three-quarter years.
Substantively today, Bullard repeated his view that the Fed needs to stand ready to take further action if the economy falters and already below-target inflation dips more dangerously towards deflation. He believes the best way to achieve this would be through incremental purchases of Treasury securities. He said he doesn’t think further action will be needed.
Those views areen’t very different than those expressed recently by the aforementioned chairman, Bernanke.
Citing his own bona fides that include 20 years of monetary policy work (and two-plus years as the St. Louis Fed leader), Bullard said today Bernanke is not fazed at all to hear different ideas about the state of the economy and potential Fed responses.
As for outreach, much appreciated by journalists and of real value to all interested citizens, Bullard said the Fed needs buy-in to have effective policy.
“These are extraordinary times for monetary policy,” Bullard said, making it incumbent on people in the system to explain things as best they can. Bullard is currently a voting member of the policy setting Federal Open Market Committee.
Indeed, those policies will be more effective if they are better understood by the public, he said.
Another part of that impudent question went something like this: had there been any pushback in Washington against Bullard’s plain speaking. There’s been “no pushback at all,” he said.