‘Transparent’ Vision: Bernanke, New Fed Chairman, Hopes to Downplay Impact of His Words

Mr. Bernanke Tries to Push Democracy at Central Bank; Setting Inflation Goals — A ‘Two-Handed Intervention’

By Greg Ip

2480 words

8 September 2006

The Wall Street Journal

A1

English

(Copyright (c) 2006, Dow Jones & Company, Inc.)

At Federal Reserve meetings under Alan Greenspan, the chairman would state his recommendations for interest rates. Then the 18 other policy makers would say if they agreed. They usually did.

After Ben Bernanke took over in February, he made some subtle but significant changes. When Fed officials debate the interest-rate decision, he speaks last. Fed officials say it makes them feel freer to talk about what’s on their minds, rather than responding to the chairman’s views. When Fed policy makers submitted their projections for growth and inflation as part of a twice-a-year report to Congress, Mr. Greenspan wouldn’t submit his own. Mr. Bernanke does.

These changes inside the Fed’s policy-making body, the Federal Open Market Committee, are manifestations of an important shift under way in the world’s most powerful economic institution.