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To: maceng2 who wrote (322255)	5/23/2006 5:22:01 PM
From: maceng2	Respond to of 436258

Bernanke says TV remarks were ‘lapse of judgment’ By Jennifer Hughes in New York Published: May 23 2006 17:09 \| Last updated: May 23 2006 17:30 news.ft.com Federal Reserve chairman Ben Bernanke on Tuesday described comments to a reporter that rocked the markets earlier this month as a “lapse in judgement on my part” and vowed to stick to more regular communications in future. His remarks end a chapter known as the “Bartiromo Affair” after Maria Bartiromo, a reporter at CNBC, the TV business news channel, reported remarks made by Mr Bernanke to a small group of reporters and bankers at media dinner. Ms Bartiromo said that Mr Bernanke had said that markets had “misunderstood” testimony he had given the previous week, and that he was disappointed by talk that he was dovish on inflation. Markets do generally perceive the Fed chairman as more dovish than his predecessor Alan Greenspan, but many strategists concede that this is the result of an 2002 speech that is often misconstrued. Ms Bartiromo’s report, made live on TV towards the end of the trading day, prompted a spike in bond yields and a sharp stock market slide. It also sparked intense and ongoing debate about the new Fed chairman’s communications skills. With the Fed’s steady series of interest rate rises nearing at least a pause, market participants are clinging to any guidance from the Fed even more closely than usual. Any data or comments that can shed light on the next likely move in interest rates are triggering sharp swings in the markets. Investors had originally taken Mr Bernanke’s testimony as suggesting the Fed would pause ins steady rate rises after its May meeting, and stocks and bonds had rallied before being whipsawed by Ms Bartiromo’s comments. “Bernanke will be more cautious in speaking to journalists in future,” said analysts at 4Cast consultancy. The Fed chairman, appearing before the Senate Banking Committee to discuss financial literacy, was careful to stick to the message conveyed by the Fed after its last meeting. “In our policy statement on May 10 we noted there are some upside inflation risks in the economy,” he told the committee. “And we indicated at that time some additional additional firming of policy might yet be needed in order to address those risks.” Markets were little moved by the comments. ”Everything else he said was right off the script - data dependent, inflation being watched, yadda, yadda, yadda,” said analysts at Briefing.com. Futures contracts currently imply the market has priced in slightly more than a 50 per cent chance the Fed will raise rates by another quarter-point to 5.25 per cent at its next meeting at the end of June. Mr Bernanke was also asked about the recent stock market slide, and said there were “a lot of factors...among them some reduction in the desire to bear risk, some change in the evaluation in the global economy and also some concerns about inflation.” Markets rallied on Tuesday after successive days of heavy falls.