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Why Is The Fed Chair So Difficult To Understand? Here's A Translation


Being able to speak like the chair of the Federal Reserve is an art. Equally impressive - being able to understand what the fed chief is saying. Here's Federal Reserve Chair Janet Yellen today.


JANET YELLEN: The committee judged that a modest increase in the federal funds rate target is now appropriate, recognizing that even after this increase, monetary policy remains accommodative.

SHAPIRO: Translation - here's why we decided to raise interest rates today for the first time in seven years. By the way, we'll hear more about the implications of that decision elsewhere on the program.


Right. But can we just talk about this language for a second? I mean, we've gotten used to hearing this kind of economic jargon, but that doesn't mean it gets easier to understand. Remember Ben Bernanke?


BEN BERNANKE: Consequently, the committee must remain exceptionally alert and flexible, prepared to act in a decisive and timely manner and in particular, to counter any adverse dynamics that might threaten economic or financial stability.

SHAPIRO: Woof - or how about Alan Greenspan?


ALAN GREENSPAN: As yet, the protracted period of monetary accommodation has not fostered an environment in which broad-based inflation pressures appear to be building.

SHAPIRO: You know, Audie, it's like I know it's important, but I don't know why.

CORNISH: And that is by design, says Caroline Baum.

CAROLINE BAUM: The fed uses these catchphrases - you know, gradual, considerable period - they're very vague terms. Why? They don't want to be pinned down. The opposite of being clear is you maintain flexibility.

CORNISH: Baum is a freelance writer. She's covered the economy for three decades and she wrote about the fed's jargon for MarketWatch.

SHAPIRO: And she says the other thing about the way fed chairs speak is that it is vague - also on purpose.

BAUM: You cannot be transparent about what you're going to do when you don't know. And I don't know why more people don't get this. I don't know why the fed doesn't get it.

CORNISH: And if the fed doesn't get it, will anyone step in to help clear things up?

BAUM: (Laughter) I'm waiting for my phone to ring.

SHAPIRO: Well, at least we found a translator. Transcript provided by NPR, Copyright NPR.

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