From Fed Speaks to Fed Listens: Signaling change in central bank’s communications?

My new piece in Moneycontrol.

I argue how Federal Reserve ‘s new communication’s program named as Fed Listens is trying to reshape central bank communications. Earlier it was all about Fed Speaks where every word of the central bank was heard and interepreted. Now the central bank is trying to move to other side of the communications table of listening.

What comes as a breath of fresh air is how the Fed is nudging us to think that it is trying to listen and not just speak. Moreover, speaking was mainly restricted to market participants whereas listening is much broader. The idea is to signal that the central bank is not just open to communicating beyond financial markets but also listening and incorporating views of others. This implies that Fed communications, which were deemed as a one way street not long ago, is becoming a two-way street.

Management literature also shows how best leaders are not just great speakers, but great listeners too who empower their teams to achieve their objectives. The Federal Reserve seems to have taken a leaf out of that book. Given that it is the de facto leader of central banks, Fed Listens is a welcome change and others should follow suit.

This change will also be welcome by ornithologists! The central bankers are often categorised as doves, hawks, owls and so on based on their “nature of speak”. This analogy is flawed as birds are first great listeners and then speakers as they rely on listening skills to keep off threats.


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