Each time there is FOMC meeting minutes announcements traders and investors awaits the results with great anticipation. It is no surprise why everyone is so curious about these minutes, these minutes often hints if not focuses on the actions of the US FED. But a well known insider of the FOMC says that these events are boring and the outcomes are known much in advance.
In an interview for BBC, the former FED chairman Ben Bernanke, told former Bank of England governor, Lord King, how the committee faced the crisis and how actually the committee works.
It is worth mentioning that some 30 years ago both Ben Bernanke and Lord King were visiting professors in the world famous MIT, this is where they have known each other, much before they ran two of the world’s largest central banks.
Ben Bernanke “Most FOMC meetings are scripted and boring”
“Monetary meetings are deadly boring,” commented Mr. Bernanke and continues that “these minutes are scripted in advance by bank staff”, but he also comments “there was a certain emergency feeling obviously to what was happening every day.”
He mentioned that the meeting of October 2008, which was right after the Lehman Brothers Inc’s bankruptcy filing, was one of those exceptional meetings. In this meeting with the G7 finance ministers in Washington, agreement was made to enable QE and pump billions of taxpayer dollars to save the sinking global banking system and keeping the global credit flow was one of those exciting meetings.
Bernanke commented that his work during the financial crisis was a mixture of dealing with unanticipated events plus more regular testimonies and speeches. Often, he commented, he was squeezing things in.
But also he emphasized that his time as the chairman was “not just about one person,” he encouraged “blue sky thinking” and would often brainstorm new ideas and approaches with committee and the staff.
He also commented that it is essential to explain to the public and politicians how and why the FED does things and this transparency increases the public confidence towards the economy. “In the US, I think the understanding is much greater today than in 2008,” he told.
He finalized his interview by commenting what values a public leader must have in order to be able to cope with crisis:
- Have a great team with intellectual framework to understand developments and pull out solutions
- Be calm under pressure and demonstrate confidence
- It is not one man job. More heads are better than one