Earning the Public's Trust
PART 2: OUR WORK
Open and Direct Communication is Key
By Karen L. Branding, Senior Vice President, Public Affairs
Throughout the Federal Reserve's history, public opinion and dialogue about the institution have ebbed and flowed. When inflation or unemployment is high, the Fed is often in the public eye. During 1991-2001, the period of the longest economic expansion in modern U.S. history, the Fed faced generally little criticism. But the financial crisis of 2007-09 put the Fed in the public spotlight in a way it had not experienced since the deep recession and high inflation of the early 1980s. Today's 24/7 news cycle and rapid expansion of social media have made the Fed the subject of daily discussion among not only its traditional audiences of bankers and financial media, but also mainstream commentators in online and broadcast media.
Congress did not design the Fed to roll over when criticized. The Fed's independent, decentralized structure ensures that unpopular but necessary policy actions can be made to achieve results for the economy overall. But with independence comes the responsibility for being accountable. Today and throughout history, confidence in the Fed as an institution is contingent on the public's trust—trust in the Fed's competence, dependability and integrity. Open and direct communication from the Fed plays a vital role in earning that trust.
What had been a gradual movement toward more transparency on monetary policy since the 1980s was accelerated by former Fed Chairman Ben Bernanke. Under his leadership, the Federal Open Market Committee (FOMC) effectively modernized Fed communications on monetary policy, establishing several practices that provide the public a clearer view of the Fed's actions and the tools it uses. Press conferences after four FOMC meetings now help clarify what happened at the meetings and translate the long-standing technical statements handed out after these meetings. A long-run goal for inflation is now explicitly stated. A summary is regularly available of the projections that each FOMC participant brings to the FOMC table regarding gross domestic product, inflation, unemployment and the federal funds rate.
But the priority the Fed puts on transparency goes beyond matters of the FOMC. Federal Reserve Bank of St. Louis President James Bullard, like his predecessors, regularly addresses business and academic audiences. In addition, he gives interviews frequently to financial and business reporters here and abroad, leading to a better understanding by the public of our central bank and its monetary policy. He also meets regularly with the congressional delegation from the Eighth Federal Reserve District, serving as a nonpolitical resource for economic and monetary policy analysis. Economists and leaders from our Bank also speak to industry and banking groups throughout the Eighth District, providing updates on the economy and gaining insights about the economic conditions on Main Street, which, in turn, contribute to the Bank's thinking on monetary policy. Events like our Dialogue with the Fed series connect the general public with Fed experts, who translate today's financial headlines and help people better understand how the economy works.
Digital media are central to a more transparent Fed. The St. Louis Fed launched its first website in 1995; today, our websites receive more than 6 million visitors every year. The Bank entered the social media space with Twitter in 2010. Many of our Twitter followers today retweet our posts, helping the Bank reach millions of people around the globe each year with news and information about the economy, monetary policy, banking, economic data and other services. In 2013, the St. Louis Fed was named one of Business Insider's "106 Finance People You Have to Follow on Twitter." And in this, our centennial year, we launched the Bank's first public blog and opened the Inside the Economy Museum to further transparency and financial literacy.
Open, timely, transparent communication is also a priority with our employees, keeping them in the know about Bank news and information, helping build stronger connections with colleagues and to the Fed's purpose, and equipping them to be ambassadors of the Fed with their friends and neighbors.
Communication technology will keep changing radically. Paste-ups and typewriters of yesterday's communications shops are a distant memory. Social media have revolutionized how news and other information are delivered and shared, positioning organizations like the Fed to reach vast audiences—territory enjoyed once only by businesses through paid advertising. Mobile devices have now surpassed personal computers in how Americans access the Internet. By 2020, an estimated 50 billion devices will be connected to the Internet, enabling ever-greater hyperconnectivity to other people, information and smart systems. By then—just six years from now—the aformentioned St. Louis Fed stats will seem quaint and perhaps even ineffectual. It is unimaginable how the technologies of 2050 and beyond will evolve the communication function within organizations.
It is said that the past informs the future. In the 1970s, the St. Louis Fed's vice president over public information, Ruth Bryant—the first female vice president in the Federal Reserve System—and her staff were charged by then-Bank President Lawrence Roos with surveying hundreds of people in the St. Louis phone book to determine whether the public understood what the Federal Reserve did; she and her staff found that some 95 percent didn't. Armed with those results, Roos helped convince his fellow 11 Reserve bank presidents that it was a priority for the Fed to undertake a more coordinated and comprehensive approach to diseminating public information and reaching out at each Reserve bank, dedicated to helping the public to better understand the central bank and its actions. The task was assigned to the newly formed Federal Reserve Subcommittee on Public Information, which still exists today as a systematic forum where public information officers across the Federal Reserve System coordinate on communications, transparency and accountability.
As communicators, we must be well-versed in managing for both change and continuity. At the Fed, the constant in the midst of ever-changing media is the fundamental importance of open, straightforward, regular communication—not only to keep the public informed but also to earn its trust.