Bernanke Urges Fed to Adopt "Alternative" Forecast Scenarios

Former Federal Reserve Chair Ben S. Bernanke on Friday called on the Fed to expand its public communication strategy by publishing alternative economic scenarios to better explain interest-rate decisions, Maria Eloisa Capurro reported for Bloomberg News.

Bernanke acknowledged the Fed’s failed 2012 attempt to publish a consensus forecast—calling it “a terrific mess.” I Photo: Federalreserve Flickr

Speaking at a conference at the Federal Reserve’s headquarters in Washington, Bernanke argued that sharing “selected alternative scenarios and their implications” would help the public understand how policy might shift under varying economic conditions.

This approach, he said, would mark “a subtle but important shift” in how the Fed communicates its outlook.

Bernanke acknowledged the Fed’s failed 2012 attempt to publish a consensus forecast—calling it “a terrific mess”—but said the central bank could start with internal staff forecasts and use those to outline plausible alternatives.

“There really is a movement toward treating uncertainty in the forecast more seriously,” he said. “The only way to do that is to have a true forecast and the ability to construct alternative scenarios.”