Fed fights aura of secrecy

WASHINGTON -- Federal Reserve Chairman Ben Bernanke moved Wednesday to break down even further the aura of secrecy that historically has enshrouded the institution that sets interest rates, taking steps to keep Main Street and Wall Street more closely wired to decisions that can make or break lives and businesses.

In the job since February 2006, Bernanke said in his announcement that the time has come for the Fed to tell the country four times a year -- not twice -- what its projections are for the health of the economy. And when it gives that forecast, it will say what it thinks the business environment will be for the following three years -- not two.

These forecasts -- a kind of Fed report card to consumers and businesses -- will state the expected pace of economic growth, the anticipated unemployment rate and whatever policymakers can divine about inflation. However, the Fed also will say expressly -- and in unprecedented detail -- what the thinking of the policymakers was on a given issue and will furnish more details about whatever risks are in play.

Bernanke called the changes an "important advance" in the Fed's communications strategy.

The first expanded set of reconfigured projections will be released Tuesday at the same time the Fed turns loose to the public the minutes of the policymakers' October meeting.

The announcement marked the biggest move yet by Bernanke to put his imprint on the Fed after succeeding the venerable Chairman Alan Greenspan. One Bernanke mark -- given a punctuation point Wednesday -- has been his stated desire to make the Fed a more open institution. Greenspan made progress on that front in his 18½ years, but Bernanke has sought to kick open the door even further, providing investors, businesses and individuals with more insights into the thinking of Fed policymakers.

Doing that, said Bernanke, helps the Fed do its job -- keeping the economy and inflation on an even keel.

Improving the public's understanding of the Fed's objectives and strategies reduces uncertainty, allowing businesses and people to make more informed financial decisions, Bernanke explained. If investors have a better understanding of how Fed policy is likely to respond to incoming information, stock prices and bond yields will tend to respond to economic data in ways that further the central bank's objectives, he added.

"The changes will provide a more timely insight into the (Fed's) outlook, will help households and businesses better understand and anticipate how our policy decisions respond to incoming information and will enhance our accountability for the decisions we make," the Fed chief said in a speech to a conference on monetary policy held at the Cato Institute.

Fielding questions after his speech, Bernanke stressed that he is especially interested in getting feedback from investors, companies and members of the public on the Fed's communications changes. "We'll consider all suggestions as we go forward," he said.