Powell boosts efforts to build public trust

Bloomberg

Jerome Powell is ramping up Federal Reserve communication to build public trust and help insulate it from political attack.
In recent weeks, the Fed has announced a series of initiatives, including a monetary-policy review roadshow, a semi-annual assessment of financial stability, and its inaugural Supervision and Regulation Report. These follow Powell’s early promise of “plain-English’’ explanations and a doubling of his press conferences starting next year.
Those initiatives, from the Fed’s first chairman from private equity, are aimed at broadening public support at a time when the central bank is raising borrowing costs for consumers and businesses. Powell’s mission has taken on greater urgency given President Donald Trump’s attacks and the residual suspicion in Congress about Fed power.
The strategy marks a break from the Fed’s typically stoic posture when under assault from the outside, effectively going on the offense to preserve its independence rather than assume a defensive crouch. If successful, the steps could also build confidence before the next recession, when the Fed may again need to use controversial emergency policies such as bond buying that infuriated some US lawmakers.
“I see in the Powell Fed people who are trying to take on board greater participation from the country,’’ said Peter Conti-Brown, a Fed historian at University of Pennsylvania’s Wharton School. “The entire idea is that the Fed must have legitimacy and accountability to be effective.’’
That’s the long game for Powell. His background as a former Wall Street banker make greater communication a more instinctive response than previous Fed chairs, though Ben Bernanke and Janet Yellen had already moved a long way from the opacity of Alan Greenspan’s era.
Confronted with the populism that Trump is channelling, Powell’s predecessors say the institution needs to be defended. “It is not a desirable thing for a president to comment so explicitly on Fed policy,” Yellen said in October. In a newly published book, former Fed Chairman Paul Volcker called the institution a “precious asset” that “does need to be shielded from partisan politics.”
In the short term, this approach faces some serious challenges. Powell will next month begin holding a press conference after every meeting of the Federal Open Market Committee, addressing the public roughly every six weeks compared with once a quarter.