Fed now tweeting, but keep expectations in check
WASHINGTON (AP) — The Federal Reserve isn't known for its brevity. Now, it has no choice.
At least when it comes to the tweets it will issue through its official Twitter channel — (at)federalreserve — which it launched Wednesday.
Like other Twitter users, the Fed will have to limit its tweets to 140 characters. Just listing the official name of its policymaking panel, the Federal Open Market Committee, would consume roughly a quarter of that space.
Please, don't expect too much excitement from Chairman Ben Bernanke's august institution. You are not following Lady Gaga or Ashton Kutcher.
Unless, of course, excitement is defined by the following tweet: "Watch a video of Chairman Bernanke explaining the structure of the Federal Reserve."
Or one that directs you to a Fed report on mobile financial services. Or to a Bernanke speech on community banking.
Those topics were among the Fed's first four tweets.
So why did 6,000 users sign up to follow the Fed within hours of its announcement? After all, the Fed explained that it will use Twitter to issue press releases, speeches, testimony and its weekly report on the value of the assets it's bought to support the economy.
The answer is that the Fed commands outsize power to move global financial markets. Investors weigh every word.
And some want to follow the Fed because they distrust its influence over the financial system. They want to keep it under watch. Some may subscribe to Ron Paul's vision of abolishing the Fed, as evident from the cheekier comments on the Fed's Twitter feed.
"As Fed comes to Twitter will US debt be limited to 140 zeros?" tweeted Zero Hedge in a comment that was widely re-tweeted.
The Fed's Twitter account hardly puts it in the front line of early technology adopters within the government. President Barack Obama tweets. So do the campaigns for all four Republican presidential candidates.
The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have tweeted more than 1,500 announcements combined since opening their separate accounts in 2009.
Still, what would legendary former Fed chairmen like Marriner Eccles, William McChesney Martin or Arthur Burns think of the Fed embracing social media?
Those men were convinced that the central bank needed to be a vault. Secrecy, they felt, was vital for the Fed to fulfill its dual mission of controlling inflation while maximizing employment. A best-selling 1989 book about the Fed was titled "Secrets of the Temple."
Things started to change slowly under Chairman Alan Greenspan, then faster under Bernanke, who's made transparency at the Fed a priority. Bernanke holds quarterly news conferences to answer questions about the Fed's policymaking.
In January, the Fed began publishing forecasts of where its policymakers expect short-term interest rates to be in coming years. And beginning next week, Bernanke, a Princeton economics professor before coming to Washington, will deliver four lectures at George Washington University on the history of the Fed and its response to the financial crisis.
The Fed's tweets will be prepared by the staffers in the Fed's Public Affairs Office who also maintain the Fed's website.
Economists on Wall Street and in academia who follow the Fed's communications took the Twitter announcement in stride.
"This is just another way the Fed is trying to direct people's attention to what they are doing," said Brian Bethune, an economics professor at Amherst.
Bethune, who does not tweet, says he will keep following the Fed on its website.
AP Business Writer Daniel Wagner contributed to this report.