RENEE MONTAGNE, host:
Ben Bernanke is on Capitol Hill at this hour, delivering his first economic report to congress since becoming chairman of the federal reserve. His testimony comes at a time when many Fed followers have been looking for signs the Fed will end its 19-month battle against inflation. So far this morning, Bernanke his told lawmakers that recent expansion in the economy has quote, "A lot of staying power." And he left open the possibility that interest rates would go up. David Wessel is Deputy Washington Bureau Chief of the Wall Street Journal, where he spent years reading between the lines of Alan Greenspan's pronouncements. He joined us to talk about what this appearance means for Mr. Bernanke. Good Morning.
Mr. DAVID WESSEL (Deputy Washington Bureau Chief, Wall Street Journal): Good morning.
MONTAGNE: David, it has been almost two decades since the new Fed Chairman made his first appearance before a Congressional committee. That's a long time. Looking back, what are the big risks one would be taking?
Mr. WESSEL: Mr. Greenspan had a lot of practice at saying what he meant, and rarely saying more than he meant to say. He, once in a while, he would say something and the markets would move, that he didn't intend. But that's a practiced skill.
Mr. Bernanke's risk is that he will say something that he thinks is completely innocuous, that's just like reading from an economics textbook, and he'll discover that on the markets, people will think, oh, he meant he's going to raise interest rates more, he's going to raise interest rates less.
So, his big risk is, he says something that isn't meant to send a signal, but the markets will hear it as a signal. He will use some adverb that he thinks is just a rhetorical flourish, and they will take it as a sign of something significant.
MONTAGNE: Well the Fed, of course, influences the economy by moving interest rates. What, in the end, does it matter what adverb, verb, adjective, that the Fed Chair uses in testimony?
Mr. WESSEL: Because the markets know that he's not going to raise interest rates this week. What they're wondering about is what's going to happen at the end of March, and what's going to happen in June, and what's going to happen in December. So, they will take these little clues as a way to change their expectations about what is the likely course of interest rates in the weeks and months ahead.
MONTAGNE: And, do you, would you know what's going on through the minds of members of Congress as they listen to the Fed Chair talk about the economy?
Mr. WESSEL: Well, that's a great question. Just once, I wish that they'd let the reporters ask the questions, instead of the members of Congress.
Many members of the House or Senate banking committees, which conduct these hearings, are more interested in hearing themselves speak than ever getting an answer. Some of them read questions, and when the witness doesn't answer them, they don't have a clue how to ask a follow-up question.
But there are always a few people who are very incisive in their questions, who challenge the Fed Chairman, who press him to take positions on things that he'd rather not talk about, or confront him with contradictions about things that he or his colleagues have said in the past. And it's at those moments that the hearings can get really interesting, and we can actually learn something about what's going on at the Fed.
MONTAGNE: Do you have an example? Obviously, it would be under Alan Greenspan that you would have heard something like this, but anything that comes to mind?
Mr. WESSEL: Well, Barney Frank, who's the congressman from Massachusetts, a very fast-speaking, very sharp guy...
MONTAGNE: Liberal Democrat.
Mr. WESSEL: ...liberal Democrat, pressed Alan Greenspan a number of times on concerns about the widening inequality, the gap between rich and poor in the United States. And I always find it interesting that Mr. Greenspan, despite his conservative, almost libertarian tendencies, would talk about why he worried about that gap between rich and poor. And it never occurred to me that he would worry about it until Barney Frank asked him.
MONTAGNE: David, thanks very much.
Mr. WESSEL: You're welcome.
MONTAGNE: David Wessel is the Deputy Washington Bureau Chief of the Wall Street Journal.
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MONTAGNE: This is MORNING EDITION from NPR News. I'm Renee Montagne.
STEVE INSKEEP, host:
And I'm Steve Inskeep. Transcript provided by NPR, Copyright NPR.