Ben Bernanke: In my opening remarks, I'd like to briefly first review today's policy decision. I'll then turn next to the Federal Open Market Committee's quarterly economic projections, also being released today. And I'll place today's policy decision in the context of the committee's projections and the Federal Reserve's statutory mandate to foster maximum employment and price stability.
Kai Ryssdal: Yeah, he went on like that for about 11 minutes. The Fed's first-ever press conference almost expired of boredom before things picked up. But as always happens when Bernanke speaks -- on Capitol Hill, mostly -- the good bits came in answers to questions, this time from reporters. There was much talk of inflation and the Fed's bond-buying program, which is going to end in June. Gas prices, about which Mr. Bernanke admitted he can do nothing. He'd like to see unemployment lower. He wants Congress to do something real about the debt and deficit for a change. And, at the end, there was a longish but pretty human answer to the question of: What's taking so long for things to get back to normal?
Bernanke: The combination of high unemployment, high gas prices, and high foreclosure rates is a terrible combination. A lot of people are having a very tough time, so I can certainly understand why people are impatient. And I guess the only thing I can say is that while the recovery process looks likely to continue to be a relatively moderate one compared to the depth of the recession, I do think that the pace will pick up over time and I am very confident that in the long run that the U.S. will return to being the most productive, one of the fastest-growing and dynamic economies in the world.
As I said, longish, but interesting. Our Washington bureau chief John Dimsdale was at the Fed this afternoon. Hi John.
John Dimsdale: Hey Kai.
Ryssdal: So after that slow start, the slow statement reading that he did, talk to me about substance. What'd he say?
Dimsdale: Well he's really worried about the slowing recovery, I think. The Fed has pulled back its growth forecast for this year pretty significantly and raised the rate of inflation, at least for the short term. Bernanke is not concerned about inflation long term. He kept saying it's only transitory, it's due to demand for commodities in developing countries and unrest in the Middle East. And that includes gas prices, he's not worried about them continuing to rise at their recent pace. He's more optimistic about unemployment coming down more quickly than last projected in January, but that too is only short term. Over the next three years, the Fed's forecast is that unemployment is going to be higher than 6.8 percent through 2013. But I think Chairman Bernanke and the Fed members are more concerned about a sputtering recovery than they are about rising inflation.
Ryssdal: What about, then, the prospect of interest rate increases? He did give us some sense of timing, right?
Dimsdale: Right. He explained what "extended period" means, which is what the Fed's been using for several years now. That means that it'll be a couple of Fed meetings, which gives markets at least a three-month warning before rates will go up.
Ryssdal: What about the atmospherics, John? This was, as everybody out there has said, an historic press conference -- never been done before. What was it like?
Dimsdale: I think there was a sense that we were breaking some new ground in terms of communicating Fed policy. Reporters were on their best behavior. Even though the head of the European Central Bank has been holding routine press conferences for 10 years or so. Bernanke was a little stiff at the beginning. But he quickly settled into, you know he's a professor. It was like a seminar on inflation and supply and demand and unemployment and the limits of monetary policy.
Ryssdal: He did say, though, that this was a conscious decision and he's going to keep on doing it.
Dimsdale: He's long advocated for a more open Fed. That's a big contrast to the past when the Fed used to shroud its decisions in mystery. It's sort of like the man behind the curtain in "The Wizard of Oz." Bernanke thinks that a more open Fed will mean fewer surprises and less volatile markets. Of course, the risk is an inadvertent statement could send the markets or economies into a tailspin.
Ryssdal: Pay no attention to the man behind the curtain. Our Washington D.C. Bureau Chief John Dimsdale today on the Fed meeting. John, thanks a lot.
Dimsdale: Thanks Kai.