Boring Ben

Zzzzzzzz. The Fed is hosting a snooze-fest.

The outcomes of recent Fed meetings have recently been about as exciting as watching paint dry. Month after month we hear the same story: interest rates will remain exceptionally low for an extended period. Recent energy and food price increases are expected to be transitory. The economic recovery is proceeding at a moderate pace. Blah blah blah.

Encouraged by the sleepy character of Fed statements, Ben Bernanke has decided to up the ante by offering a press conference following the meeting. The one yesterday was as boring as the announcement itself, and about as informative. While he doesn’t speak in Greenspan’s tortured prose, his discussions with the press were as animated as the introductory college courses I was forced to sleep through as an undergraduate. Cruel and unusual punishment!

All kidding aside, a boring Fed is exactly what we need. Congress is playing chicken with a $1.5 trillion deficit; US cities are looking at an estimated $20 billion shortfall; Greek two-year notes yield 25%; and the dollar has fallen through its 2009 lows. There are plenty of sources of excitement in the markets.

Ben Bernanke is an open, decent man who believes that opening up Fed policy, with certain caveats, is the best way to run a central bank. The European Central Bank does it; the Bank of England does it; there’s no reason why the Fed can’t. Moreover, Bernanke has continued the trend towards greater openness that began in 1994.

My only concern is what comes after? Bernanke seems ready and able to put us all to sleep. What happens if a more colorful character becomes Fed chair?

Douglas R. Tengdin, CFA
Chief Investment Officer
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