WASHINGTON — As Ben Bernanke nears the end of his term as Federal Reserve chairman, he is talking more about what may be one of the enduring legacies of his eight-year tenure: the Fed's dramatically expanded communications with the public.
These have included instituting quarterly news conferences by the chairman, among other regular public appearances, and providing an explicit target on inflation and thresholds for Fed policy actions.
On Monday, in remarks at a gathering to mark the 100th anniversary of the law that established the Fed, Bernanke described these changes as an "ongoing revolution in communication and transparency" at the central bank, which over most of its history has operated in great secrecy.
Bernanke said improved transparency and communication have helped make Fed policies more effective. But most important, he said, they are crucial to ensuring the accountability of the institution to the public and elected representatives, some of whom argue that the Fed still isn't open enough.
This week, the spotlight will be on Bernanke and the Fed. The chairman and his colleagues meet today and Wednesday for their last monetary policy meeting of the year. Their main focus: whether to begin reducing their $85-billion-a-month bond-buying stimulus. The program is aimed at holding down long-term interest rates to stimulate economic growth and help lower the unemployment rate. Economists are divided on whether the Fed will initiate the so-called tapering this week or wait until the first quarter of next year.
If the Fed decides to taper, one action policymakers could take to offset a potential hit on stocks is to reassure investors by tweaking its "forward guidance" communication to stress that the Fed plans to keep short-term interest rates near zero for a long time.
Previously, the Fed has said it probably wouldn't begin raising short-term rates as long as the unemployment rate stays above 6.5 percent and inflation remains under control. Some analysts say that unemployment threshold could be lowered to 6 percent. The current jobless figure is 7 percent.
Also this week, the Senate is expected to vote on the nomination of Janet Yellen to succeed Bernanke when his term as chairman expires at the end of January. Yellen, a former University of California at Berkeley professor who has been the Fed's vice chair since October 2010, is expected to win Senate confirmation handily.