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Marketplace®

Daily business news and economic stories

Fed chief Powell rates high on messaging

Jerome Powell discusses the central bank's interest rate cut with journalists Wednesday.
Jerome Powell discusses the central bank's interest rate cut with journalists Wednesday.
Mandel Ngan/AFP via Getty Images

The Federal Reserve used to be a lot more opaque than it is now. Fed chairs didn’t really do news conferences until 2011, when Ben Bernanke decided better communication would not just make financial markets more stable, but also enhance public trust in the central bank.

Let me tell you from personal experience, explaining to the public why the Fed is doing what it’s doing can be pretty tricky — especially at a time when inflation and the presidential election has thrust the Fed into the spotlight.

So how is Chair Jay Powell doing getting his message across?

I asked Jessica Rett, a linguist at the University of California, Los Angeles, what she was planning to eat for lunch.

“I feel like a grilled chicken Caesar salad today,” she said.

Then I asked her how Powell might answer that question, based on her analysis of some of his recent speeches and news conferences — everyone knows lunch is data-dependent.

Rett said Powell couches his comments in hypotheticals and hedges, which makes sense. If inflation rears its head again or the labor market drops off a cliff, Powell doesn’t need critics or presidential candidates saying, “Hey, you said you weren’t going to do the thing you just did!”

“He has plausible deniability in case something goes wrong,” she said.

At the same time, Powell also needs to project credibility in asserting that inflation is mostly whipped and the Fed can safely change interest rate policy. He needs people to believe that they know what they’re doing.

Alison Fragale researches communication styles at the University of North Carolina. She noticed a helpful habit in Powell’s July news conference. “He does reference the FOMC quite a bit,” she said, referring to the Fed’s monetary policymaking committee. “It’s a form of social proof, which promotes competence. ‘I don’t think this, we think this.’ ‘We’ is always more persuasive than ‘I.'”

Overall, Powell gets pretty good marks from most of the communication pros I talked to.

Tamsen Webster, who consults on messaging for companies like asset manager State Street, said she was mostly able to parse through the jargon in Powell’s Jackson Hole speech last month.

But since his audience in Wyoming included both economists and the public, she has a suggestion.

“Anytime you’ve got very detailed information like what he’s presenting here, present it also with conceptual, and I often recommend, metaphorical information so people can really understand what he’s talking about,” she said.

As a journalist, though, I hope Powell doesn’t get too good at explaining himself — that’s kinda my job.

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