Fed to change timing of policy statement
- Article by: MARTIN CRUTSINGER
- Associated Press
- March 13, 2013 - 3:39 PM
WASHINGTON - The Federal Reserve is changing its schedule for issuing policy statements, a shift that will give Chairman Ben Bernanke an opportunity to better control the message it sends to financial markets.
The Fed will now issue a statement at 2 p.m. Eastern time for all eight meetings. Four of those meetings will be followed by a Bernanke news conference at 2:30 p.m.
Prior to the change, nearly two hours passed between when the statement was issued and Bernanke's news conference began.
By reducing the time in between, Bernanke can more quickly manage how the statement is interpreted. Investors scrutinize the Fed's words for signals of when it might start raising interest rates.
The time changes will go into effect at the Fed's next meeting on March 19-20.
"They probably did some research and said the market has periods of increased volatility right after the announcement," said Robert Pavlik, chief market strategist at Banyan Partners. "Well, of course there's going to be. That's the way it works."
Many economists believe Fed officials will maintain their low-interest rate policies at current levels but take no new steps at the March meeting.
In January, the Fed stood behind aggressive steps it launched in December to try to reduce unemployment. It repeated that it would keep its key short-term interest rate at a record low at least until unemployment falls below 6.5 percent. And the Fed said it would keep buying Treasurys and mortgage bonds to help lower borrowing costs and encourage spending.
The unemployment rate fell to a four-year low of 7.7 percent last month, down from 7.9 percent in January when the Fed last met.
Critics, including some regional Fed bank presidents, have expressed worries that the Fed's policies could hasten inflation. But Bernanke has sent signals recently that he plans to keep continue the Fed's aggressive policies until there is a substantial improvement in the job market.
The Fed only started to release brief policy statements after its meetings in 1994. Before then, markets had to guess at the Fed's intentions on interest rates. In 2011, Bernanke went further by holding regular news conferences, a first for a Fed chairman.
"They are trying to be more open and work with the market to some degree. It's probably a good thing," said Pavlik. "You don't want to give away the store but to try to get their message across so that people can understand it in real time makes a lot of sense. Maybe, if they could put it in language that the average man can understand, instead of double-Fed-talk, it would probably make even more sense."
AP Markets Writer Steve Rothwell contributed to this report.
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