“It’s worrisome that people would look at me as dovish and not necessarily an aggressive inflation-fighter,” Ben Bernanke reportedly said on Saturday to CNBC’s Maria Bartiromo, as she recounted via LATimes.com.
Bartiromo yesterday said she talked with the Fed chairman over the weekend at the annual White House correspondents’ dinner, where she engaged the head of monetary policy on the matter of whether “the markets and the media [got] it right last week in terms of its reaction to your congressional testimony,” the CNBC correspondent explained on Monday. Bernanke insisted that his aim was only to allow the Fed some “flexibility” in its management of the nation’s money supply.
But if Bernanke intends to be the voice of persuasion in proving his hawkish mettle, he still has his work cut out for him. Indeed, there’s a thin line between espousing the value of flexibility and being seen as dovish in Mr. Market’s mind these days.
The next big chance for enhancing or diminishing Bernanke’s newly acquired dovish patina comes next week, on May 10, when the Fed’s FOMC convenes to consider interest rates again. To raise or not to raise will be the question, of course, although the futures markets is betting that another 25-basis-point hike is in the offing. But this time the stakes will be higher than with past rate hikes, which have been coming steadily in 25-basis-point increments since June 2004.