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Fed chair faces from Wall Street to White House.
There's what you think you said. There's what you actually said. And perhaps most important for the world's largest economy, there's what people heard.
That's a lesson that the Federal Reserve Chairman Jerome Powell is learning the hard way as he seeks to steer the economy between the twin shoals of overeating and recession while being buffeted by criticism from Wall Street to the White House.
Powell is going to be getting a lot more practice. He will hold a news conference after every month of the month – boosting both the opportunity to refine his message and the risk of sowing confusion.
Case in point: Powell's unscripted comments Oct. 3 That monetary policy was still boosting the economy and probably was a long way from neutral.
While numerous, it is important to note that the rate of change is high. And they dumped stocks in response, helping send the S & P 500 index to its worst performance since 2011 last month.
Jefferies chief market strategist David Zervos did not mince words, blaming Powell's inexperience at the helm. The sell-off was "simply the result of a new Fed Chair fumbling the communications ball," he said in an email to customers.
Powell is scheduled to hold a meeting at the end of the year. hold one after every year starting in January.
"Heightened financial-market volatility has not altered the Fed's resolve to hike in December," Morgan Stanley Chief U.S. Economist Ellen Zentner and her fellow economists wrote in a Nov. 1 note.
The problem is that investors are still getting to know Powell eight months after he becomes chairman. Unlike Ben Bernanke and Janet Yellen, he does not have a doctorate in economics and prides himself on his ability to translate difficulties into English. That's undoubtedly what he was trying to do in Oct. 3 comments to television anchor Judy Woodruff.
The result is that perhaps "a little gets lost in translation in the financial markets because people want to infer changes in the substance of what's being said when it's changing is just the approach," said Stephen Stanley, chief economist of Amherst Pierpont Securities.
Wrightson ICAP chief economist Lou Crandall said he understands how investors could have misread Powell's Oct. 3 remarks.
Still, Crandall voiced hopes that Powell "succeeds in getting to a world where he can speak in plain English and not have people misunderstand him."
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