Ben Bernanke has been praised for encouraging his Federal Reserve colleagues to air sometimes-contradictory views publicly. But in late 2008, a year that can politely be described as tumultuous for the economy as a whole, the Fed chairman wanted central bankers on board with a single message.
“Given the state of confidence in the markets and in the economy, I hope whatever disagreements we may have that as much as possible we can keep them within these walls,” Bernanke said, according to a transcript from the Fed policy-setting committee’s December 2008 meeting, released Friday after a five-year lag.
That month, Fed officials decided to cut the federal funds rate to zero in an attempt to boost economic activity. From then on, the central bank would have to rely on other unconventional and never-used measures to shore up growth as the economy crumbled around them.
Fed staff worried that when the interest rate was cut to zero, the press would report that the central bank had “run out of ammunition,” something that could undermine the Federal Open Market Committee’s message that it was still able to provide stimulus.
Bernanke suggested that Fed officials “come together and decide what policies we want to pursue and then collectively take responsibility for those policies and communicate them in a coherent and consistent way to the broad public.”
Richard Fisher, head of the Dallas Fed, concurred: “If we’re going to sell something, we have to sell it by repeating it, not asking the press to interpret it for us,” he said.
“One of my colleagues often says that, if you’re Elton John, you are expected to sing ‘Bennie and the Jets’ every single time and at every single concert. It seems to me that, once we get and hone our message, we must repeat it incessantly and stay on message in order to have it penetrate,” he said.
Fed officials discussed at the December meeting some of the communications strategies it has since adopted, including holding quarterly press conferences with the chairman. Bernanke held the first news conference in April 2011. They also considered adopting a long-term inflation target, a step the Fed took in Jan. 2012.
The unconventional steps the Fed has taken since December 2008 include three rounds of large-scale asset purchases, known as quantitative easing. The Fed began to unwind the current, open-ended round in December 2013; it is now buying $65 billion worth of Treasury and mortgage-backed securities each month.
The December 2008 meeting transcripts were part of a larger bundle of transcripts released from the central bank’s meetings that year that provide a closer look at how the Fed was reading the data coming in and debating its response to an increasingly dark economic picture.
Similar transcripts from the Fed’s meetings in 2007 showed policymakers struggling to understand the crisis unfolding around them.
The Fed typically releases minutes from meetings, which provide only a general overview of the discussion and do not affiliate people with their positions, with a three-week lag. The much-more detailed transcripts are released five years later.