Central bankers ignore public speaking rehearsals at their own peril

An important tidbit of information from this week’s post-FMOC press conference:

Fed Chair Janet Yellen clearly was well prepared to face journalists' questions about the U.S. election, and Donald Trump in particular. As an eagle-eye journalist pointed out, Yellen was apparently reading from a prepared statement when answering a question whether the Fed was keeping interest rates artificially low to support the Obama administration, as the Republican presidential nominee has charged.

 United States Federal Reserve Chair Janet Yellen holds a news conference following the two-day Federal Open Market Committee meeting in Washington, U.S., September 21, 2016. (Reuters picture)

United States Federal Reserve Chair Janet Yellen holds a news conference following the two-day Federal Open Market Committee meeting in Washington, U.S., September 21, 2016. (Reuters picture)

Here is the relevant part of transcript of Chair Yellen’s press conference):

JON HILSENRATH. Jon Hilsenrath, from the Wall Street Journal. Chair Yellen, Donald Trump, the Republican presidential nominee has charged that the Fed is keeping interest rates artificially low to support the Obama administration. I'd like to hear what you have to say to that charge. And on a related note, I wanted to ask you about the Fed's next policy meeting which is in early November a week before the next election, given that the case for raising rates you say today has strengthened, should the public see that November meeting as a live meeting when a rate action could happen? Thank you.

CHAIR YELLEN. Well, I think Congress very wisely established the Federal Reserve is an independent agency in order to insulate monetary policy from short term political pressures. And I can say, emphatically, that partisan politics plays no role in our decisions about the appropriate stance of monetary policy. We are trying to decide what the best policy is to foster price stability and maximum employment and to manage the variety of risks that we see is affecting the outlook. We do not discuss politics at our meetings and we do not take politics into account in our decisions. As I said, we're generally pleased with the progress of the economy. And the decision not to raise rates today and to wait for some further evidence that we're continuing on this course is largely based on the judgment that we're not seeing evidence that the economy is overheating. And that we are seeing evidence that people are being drawn in, in larger numbers than at least I would have expected into the labor market and that that's healthy to continue. But that nevertheless, we do need to be forward looking. And if we continue along this course, it likely will be appropriate to raise the federal funds rate. And November, you asked about as well. Well, every meeting is live and we will again assess as we always do incoming evidence in November and decide whether or not a move is warranted.

When I speak to senior central bankers in various parts of the world — be it Eastern Europe, central Asia, or Africa — I always stress the importance of devoting time and effort to prepare Governors well for public appearances such as press conferences or speeches. A nation’s leading central banker ignores rehearsals ahead of his or her public speaking engagements at their own peril.