Janet Yellen Speaks at the University of Michigan, April 10, 2017

In what has been described as an unexpected move, Federal Reserve Chair Janet Yellen had a conversation with an audience with Susan Collins, who is Dean of the Gerald R. Ford School of Public Policy at the University of Michigan last night. I have not had a chance to digest her discussion fully, but have a few comments:

1. The words of the Fed chair carry a lot of weight in short-term financial markets. The public appearance was scheduled right after market close to minimize volatile reactions.

Janet Yellen, Fed portrait

2. She had a free-wheeling conversation rather than a speech per se. She and Dean Collins sat on stage in comfortable chairs, and Yellen responded to questions. This was in some ways more interesting than giving prepared remarks.

3. Given the college audience, she began by talking about the Fed's role and the reasons that it exists.

4. As usual, Yellen's delivery was calm and measured. She spoke with variety and emphasis, but was careful not to sound excited. This helped to present her ethos as a calm, objective specialist as opposed to an ideological advocate. Standard persuasion theory suggests that an energetic delivery enhances a speaker's credibility. This is true in general, but the Fed Chair is probably an exception.

5. Yellen explained her points clearly and articulately. She reeled an array of historical and statistical facts off the top of her head, which, in turn, helped to establish that she was credible. She adapted to the audience of college students, while, at the same time, she obviously was reaching out to the larger economic audience.

The general public probably pays little attention to the Fed Chair's speeches, which are far less exciting than the exciting speeches that we expect from politicians, convention keynote speakers, and so forth. In contrast, the financial community hangs on her every word.

N.B.: In her remarks, Yellen took a middle route and defended Fed policy; at the same time, she was willing to admit when the Fed made mistakes, and explained how they learned from their mistakes. Are the ideological politicians, who never admit they are wrong, paying attention?