Fed Spreads Confusion With Efforts to 'Clarify' Bernanke's Remarks

Not so long ago, the Federal Reserve tried to obscure its operations behind a fog of jargon and euphemisms. As Beltway legend has it, when a senator told Alan Greenspan that he understood one of his points, the longtime Fed chairman replied, “Then I must have misspoken.”

Greenspan’s successor, Ben Bernanke, has pushed the central bank and its members to be more direct. Bernanke held the Fed’s first-ever press conference in 2011, and in his testimony to Congress he’s tried to demystify the bank’s extraordinary efforts to boost the economy, which currently take the form of buying $85 billion of bonds each month and keeping short-term rates near zero. It was at one of those hearings, in May, that Bernanke first talked about the possibility that the purchases could wind down sooner than expected. The reaction was violent: Stocks, bonds, gold, and other assets sold off sharply at the prospect of the Fed’s fuel drying up, and a key measure of volatility surged 44 percent.