How could a central banker like Powell get into such a mess?

Jerome PowellJerome Powell, chair of the US Federal Reserve.

JP Marin-Arrese │Any seasoned central banker knows by heart that words rather than measures better serve monetary policy. The material effect any move delivers doesn’t match the impact on expectations and market sentiment an authoritative message conveys.

Providing plausible clues for the rate cut enforced last week was by no means an easy task. Yet,as a central banker, Jerome Powell made the worst choice by describing it as an adjustment in the middle of the cycle. A most unfortunate definition that baffled investors leaving them wondering whether the much-heralded U-turn would peter off following this single shot.

By conveying such a confusing message, the Fed Chairman deprived the rate cut of any sensible meaning. Worse still, he undermined all its potential impact, wetting the powder of a bullet designed to invigorate the economy. Pilfering munition when the Fed seems somewhat short of it stands as an unmitigated blunder.

Undoubtedly, Powell is far from a gifted speaker. He fails to deliver subtle and convoluted messages, a useful device frequently put to practice by Greenspan when confronted with tricky issues for which he had no answer. He neither masters economy theory in the way Bernanke did, taking profit from his expertise to divert attention into intractable debates the press proved unable to follow. Still, one expected Powell to perform less clumsily. The Fed should much improve its communication policy to prevent further damage in future.

About the Author

Shaun Riordan
Shaun Riordan is Director of the Department for Diplomacy and Cyberspace in the European Institute of International Studies and a senior visiting fellow of the Netherlands Institute of International Relations, “Clingendael”. He is also an independent geopolitical risk consultant. A former British diplomat, he served in New York, Taiwan, Beijing and Madrid, as well as the departments of counter-terrorism and the Eastern Adriatic in the Foreign Office. Shaun has taught at diplomatic academies in the Dominican Republic, Spain, Armenia and Bulgaria. He is the author of “Cyberdiplomacy: Managing Security and Governance Online” (Polity, 2019), “Adios a la Diplomacia” (Siglo XXI, 2005) and “The New Diplomacy” (Polity, 2003). He maintains a blog ( and can be followed at @shaun_riordan