Like the Soviet Union after Stalin, it seems that trying to figure out what is going on at the Fed after the Greenspan era is like predicting a game of chess among masters. Only this time, we're the pawns. Or maybe the economy is the chess board. Or, oh, never mind.
Gerard Baker reports:
... from what I hear, it was not only startled bond traders who were murmuring profanities about the world's most powerful central banker. It seems that some of his own colleagues within the Fed were somewhat upset by the way the chairman appeared to pre-empt an evolving debate at the central bank about the next move in interest rates...
[More from Baker on the Fed after the jump]
While some members are generally happy to follow the lead, some are first-rate economists in their own right who don't take kindly to having their decisions made for them by pre-emptive speeches by the chairman. It is one of the heavier ironies of what economists are already calling the Bernanke Fed that Alan Greenspan, his predecessor, was sometimes criticised for forcing his colleagues' hands with a speech about policy before their meetings.
Of course, there is nothing to stop any members who disagree with Bernanke from voting against the likely rate rise on June 29 if they disagree.
But this early on in Bernanke's tenure (he only took office four months ago), they might consider that reckless, fearing it could undermine the chairman in financial markets where his reputation is not, at the moment, absolutely stellar.
Bernanke upsets Fed fellows [The Australian]