(Repeats analysis first released late on June 23)

By Ann Saphir

CHICAGO, June 23 (Reuters) – Ben Bernanke used his
second-ever news conference on Wednesday to teach the worlds
financial markets a lot more about the thinking at the Federal
Reserve than they could glean from its usual statements.

But the Fed chairman and former Princeton professor has yet
to face one of the most important oral exams of his career:
justifying and defending a change in the Feds extraordinary
monetary policy, when the time comes.

There havent been any big surprises or shifts in policy
for Bernanke to sell, Paul Ashworth, chief US economist at
Capital Economics said on Thursday.

When this will earn its money is when the market response
to the (earlier) statement is one way and he is able to correct
any misperceptions. That will be when the press conference
really pays off.

Bernankes news conferences mark an important departure
from the Feds approach to communications that for decades used
to put a premium on secrecy.

The Feds focus is now on clarity after the its decision
last year to embark on a second $600 billion round of
bond-buying touched off a political firestorm with politicians
accusing the central bank of jeopardizing the US dollar with
its bold experiments in monetary policy.

Looking less nervous than in his first news conference in
April, Bernanke took questions from reporters for an hour on
Wednesday and, displaying his professorial background, sounded
confident and calm in his answers.

Bernankes former number two said the gamble of exposing
the worlds most important monetary policymaker to the glare of
the media was worth taking, given how hard it was to defend the
Fed against the barrage of criticism over recent policy moves.

I thought the circumstances were sufficiently unusual and
the Fed was being sufficiently misunderstood and misinterpreted
that giving the chairman another shot, another couple of shots
of explaining what the Fed was doing was very much worth the
risk of an occasional misstatement or distraction, Former Fed
Vice Chairman Donald Kohn told Reuters in an interview.

On Wednesday, Bernanke and the top Fed officials kept
interest rates near zero and, using the same language they have
for two years, said they will stay exceptionally low for an
extended period.

Asked exactly how long that is, Bernanke said at least two
to three meetings … and I emphasize at least.

That unusually precise answer, for a central banker, helped
calm financial markets worried about the slow pace of the US
economic recovery, said Todd Colvin, a futures broker at MF
Global in Chicago.

Short-term US interest rates are expected to stay below 1
percent until August 2013, according to futures trading on
Thursday.

Bernanke also used the hour-long news conference to calm
fears that inflation is getting out of hand, ahead of a
hawk-heavy line-up of top Fed officials speaking next week that
includes Minneapolis Fed President Narayana Kocherlakota and
Kansas City Fed President Thomas Hoenig.

Its reasonable to think that core inflation will fall
back towards mandate-consistent levels, Bernanke said on
Wednesday.

At times last year, markets took their cues from the vocal
hawks whose outspoken concerns that Fed policy would fuel
inflation complicated attempts to create the sense of a Fed
consensus that Bernanke now promotes.

It gives markets a better context in which to interpret
what they are hearing later from other members of the
Committee, Kohn said of Bernankes news conferences. So I
think its a very positive development.

An analysis of Bernankes comments show he talked more
about unemployment on Wednesday than at his first news
conference, signaling growing concern over the labor market
(For a graphic please see:
here )

(Former Fed Chairman) Alan Greenspan was famous for
needing a secrete decoder ring for trying to understand what he
was saying, said Michael Hanson, a senior economist at Bank of
America/ Merrill Lynch in New York. I think Bernanke is much
more willing to say what is on his mind.

While arguing that rising inflation leaves little scope for
another round of stimulus, Bernanke listed several tools the
Fed could use to ease monetary conditions further should it
need to do so.

There were definitely things that one learns, said
Michael Feroli, an economist at JP Morgan Chase.
(Reporting by Ann Saphir, with additional reporting by Mark
Felsenthal in Washington and Alexandra Alper in New York;
editing by Andre Grenon)