Fed’s Chief Jawboner to Let Data Do the Talking
After a year in which Jerome Powell’s words have held all-powerful sway over stocks and bonds, he’s ready to step back and let hard numbers drive the narrative.
Fed Chair Jerome Powell eases up on the bully pulpit.
Photographer: Valerie Plesch/Bloomberg
For much of the past year, Federal Reserve Chair Jerome Powell has used his marquee speeches to jawbone markets lower to put downward pressure on inflation, making his words the most powerful force in markets. On Wednesday, however, he humbly took a step back and made his most explicit commitment yet to let the data do most of the talking.
Until recently, of course, Powell and his colleagues on the Fed’s rate-setting committee have been singularly focused on getting financial conditions tighter — and fast. At his policy speech in August in Jackson Hole, Wyoming, he methodically neutered every dovish narrative circulating on Wall Street at the time. Now, though, policymakers are starting to slow the pace of tightening, including the sort that happens through expectations management. That’s the right approach as the Fed tries to feel its way around in the dark for a level of financial and economic conditions that will bring inflation back under control, ideally without walloping the labor market.