Fed Chairman Powell is 'overdue for a press conference gaffe,' says Wells Fargo

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US Federal Reserve Chair Jerome Powell attends a “Fed Listens” event in Washington, DC, on October 4, 2019.

Eric Baradat | AFP | Getty Images

On the eve of the Federal Reserve’s announcement, some on Wall Street started to get flashbacks to Chairman Jerome Powell’s past communication miscues.

“We would not be surprised if the market sells off after the FOMC partly because we think Chairman Powell may be overdue for a press conference gaffe,” Christopher Harvey, head of equity strategy at Wells Fargo Securities, said in a note to clients on Wednesday.

The central bank is widely expected to deliver a third straight rate cut on Wednesday. Powell is set to take the podium at the press conference at 2:30 p.m. ET following the Federal Open Market Committee announcement.

“The last few times we heard him speak we got the distinct sense that the message he intends to convey is not always received as such by the markets,” Harvey said.

Indeed, over the past year Powell has had a few miscommunications that roiled the financial markets. In December, he described the Fed’s reduction of its balance sheet asset holdings as being on “autopilot,” a signal of tighter policy ahead.

In July, Powell characterized an interest rate cut as a “midcycle adjustment” rather than the beginning of a period of successive cuts that the market was looking for.

“When it comes to commentary, we believe that less is more,” Harvey said. “Obviously, requiring a press conference for every Fed meeting suggests the Chairman holds a much different view. We shall see.”

— With reporting by Michael Bloom

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