Fed Chief Learns His Microphone Is Never Off

Ben S. Bernanke has apparently figured out that as Fed chairman he speaks with a megaphone -- especially when he talks to CNBC reporter Maria Bartiromo.

Bernanke acknowledged Tuesday that he made a “lapse in judgment” by discussing Federal Reserve policy with the CNBC television anchor -- comments that subsequently drove stock and bond prices lower.

“In the future, my communications with the public and with the markets will be entirely through regular and formal channels,” Bernanke said in response to a question at a Senate Banking Committee hearing.

Bernanke talked to Bartiromo at a White House Correspondents’ Assn. dinner in Washington on April 29, and she reported his comments two days later. Among other things, Bernanke told Bartiromo that he was disappointed that the markets saw him as being dovish on inflation, and that he never meant to suggest in congressional testimony that the Fed was finished raising interest rates.

Bernanke said in testimony April 27 that the Fed might pause raising interest rates at some point to allow more time to assess economic data, although such a break wouldn’t preclude subsequent rate hikes.

Partly because their statements can rattle markets, Fed chiefs rarely give impromptu interviews, usually discussing policy matters only in regularly scheduled speeches and in congressional testimony.

Bernanke isn’t the first freshly minted Fed chairman to give a television interview -- and then admit to a faux pas.

Alan Greenspan appeared on ABC’s “This Week With David Brinkley” program shortly after taking the central bank helm in August 1987. Stocks fell after Greenspan suggested on the program that inflation could become a problem if consumers and businesses thought it was inevitable.

Greenspan never granted another television interview on the economy during his 19-year term that ended in January -- not even to his wife, NBC News reporter Andrea Mitchell.

Also in his Senate testimony Tuesday, Bernanke said factors behind the recent stock market sell-off included “some reduction in the desire to bear risk, some change in evaluation of the global economy and also some concerns about inflation.”

Bernanke said there would be plenty of incoming economic data for the Fed to assess before its next interest rate-setting meeting June 28 and 29.

One safe bet: Bernanke will not foreshadow the announcement in television interviews.

Bloomberg News was used in compiling this report.