The Federal Reserve has a committee studying how to improve communications with the public. But change was not in evidence in the latest statement issued today following the rate-setting meeting of the central bank.
In a bid to be more open with investors and the general public, the Fed should adopt a less stilted post-meeting announcement of its rate decision. Sure, each word the Fed utters must be carefully chosen because each word will be subject to over-the-top analysis by market types and analysts. But still, the Fed should indicate it doesn’t live in a cave.
The Fed begins today’s statement this way: “Information received since the Federal Open Market Committee met in January suggests…” But it doesn’t specifically mention that since the FOMC met in January there have been revolutions and ongoing rebellions in the Middle East and an earthquake/tsunami/nuclear scare in Japan.
The former is referred to in the Fed’s statement only via this: “concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks.” This statement did not dent the Fed’s view that inflation remains under control, in fact too low for comfort.
As for the tragic and still unfolding events in Japan, which promise at least the hint of a temporary slowdown in global economic growth, there is not a word from the central bank. An acknowledgment of increased uncertainty because of the situation in Japan would have been appropriate.
If the Fed wanted to be a bit snarky, the policymakers could have referenced the new economic negatives associated with Japan when it stated it would continue its program to buy $600 billion of longer-term Treasury securities by the end of the second quarter.
After all, this policy, which has been criticized by some as too loose for too long, was the product of Fed thinking that it had best err on the side of monetary ease until economic growth was entirely secure. No one would have predicted the sad and painful events in Japan, but given what’s happened it is probably better the Fed was still in super-ease mode.
Fed Chairman Ben Bernanke has been successful in his own unusual-for-the-Fed public appaearances, which included a spot on the widely watched television program “60 Minutes” and entertaining questions from the media at a National Press Club appearance in Washington.
Communications policy at the Fed now ought to turn to the post-meeting statement. Loosen it up. Make it clear the Fed is acting in full receipt of breaking news around the world and analyzing those developments for their monetary policy implications.