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Jonathan Levin

Powell Is Better When He Sticks to the Script

The Federal Reserve chair was clear and effective at delivering his hawkish message in his Jackson Hole speech. If only his press conferences were so straightforward.

Some media training might be in order.

Some media training might be in order.

Photographer: David Paul Morris/Bloomberg

Federal Reserve Chair Jerome Powell finally figured out how to deliver a consistently hawkish message to markets. Clearly, he carries out the task at hand more effectively when he’s reading a speech, not answering questions off the cuff.

Ever since the reputed dove became responsible for extinguishing the worst inflation in 40 years, Powell has been an awkward messenger of the Fed’s inflation-fighting goals. Every time the Fed has raised rates this year, Powell’s press conferences have triggered market rallies, the opposite of what the Fed is trying to achieve in financial conditions. To be sure, some of that is just market positioning (“relief rallies” often materialize for no particular reason just because a risk event has passed). But much of it boils down to Powell’s style: In answers to reporters, he meanders and tries to offer both sides in any discussion of the outlook. Market bulls with a case of confirmation bias can easily dig out a few comments that fit their narrative.