Public Communication Vital for Fed’s Legitimacy

The Federal Reserve must clearly explain its decisions to Americans and convince them that the policies are in their interest, Chairman Ben Bernanke said on Monday without specifically discussing monetary policy or the U.S. economy.

Bernanke, in prepared remarks to an event celebrating the Fed’s centennial, said the U.S. central bank’s legitimacy and independence relies on two-way communication with the public.

The Fed’s policy-making Federal Open Market Committee holds a meeting Tuesday and Wednesday at which officials could decide to trim their $85 billion in monthly asset purchases, if they believe the economy is strong enough to sustain less stimulus.

CNBC

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