Populism deals in simplicity. Federal Reserve policy making is inherently complex, and the Fed is at a crossroads. Chairman Jay Powell and his two predecessors Janet Yellen and Ben Bernanke have expanded the communications practices of the Fed in two senses. Firstly, the FOMC’s Summary of Economic Projections, issued quarterly, includes “forward guidance” on where the FOMC sees interest rates going in the short to medium term, in addition to three-year rate projections. Secondly, Fed officials have given more public lectures than in the pre-Bernanke, Greenspan era and press conferences follow FOMC meetings, offering explanations for the policy decisions taken.
These measures are now being broadened as the Fed wants to buttress its political independence and maintain its legitimacy embedded within a democratic and electoral politics based system. Hence the use of “Fed Listens” events and other efforts to acquire information about perceptions of the central bank in this time of change.
Desmond King is Andrew Mellon Professor of American Government and Professorial Fellow, Nuffield College