Shake on it: The utterly scientific guide to central bank governor toughness

SINTRA, Portugal — The ECB and other central banks famously communicate monetary policy almost entirely through covert signals and coded messaging. “More ground to cover” means rate hikes will probably continue after the summer. “Persistent” inflation means previous hikes have failed. “Data-driven approach” means the bank is just making it up as it goes along.

Newswires live or die on this kind of semantic play, but we at POLITICO believe that there is a better way of ascertaining central banks’ determination to hike.

We’re talking, of course, about the good old handshake, the fleshy greeting that has (in some cases quite literally) oiled the hinges of human hellos since ancient Mesopotamia. In our view, a handshake is the ideal way to get a sense of a banker’s future voting on policy rate decisions. Through what other medium but the electric touch of a banker’s palm could the courage of a monetary conviction reveal itself?

With that in mind, POLITICO endeavored to shake as many clammy central banker mitts as possible at this year’s banker gathering in Sintra, Portugal, to get the true sense of who’s serious about squeezing the money supply — and whose insufficiently restrictive handshakes signal a dangerously relaxed attitude to inflation come the end of summer.

1. Robert Holzmann, Austrian National Bank governor.

Governor: First up was Austria’s Robert Holzmann, who made a decidedly Habsburgian first impression. And by that we mean one of your ‘plunge-Europe-into-30-years-of-war-through-dogmatic-religious-policy’ Habsburgs, rather than some frivolous compulsive waltzer of the latter years.

Handshake: Before we could even consent to a manual introduction we were enveloped, utterly, in the big man’s grasp, five rubbery, Frankfurter-like fingers sealing us in. No light could escape a grip of that magnitude. No Ottoman Janissary could resist its unwavering advance. It was like getting pulled into a car compactor, or shaking hands with an Alp mid-avalanche.

Bottom line: Holzmann will raise rates by 400 percent given the opportunity—and that’s just for July. Policy will be tightened until entropy reverses and the universe itself contracts.

Rating:

2. Klaas Knot, Dutch central bank head and chairman of the Financial Stability Board.

Governor: Next was Klaas Knot, the towering governor of the Netherlands central bank and a known athlete.

Handshake: Knot’s handshake was competent and firm, but was ultimately disappointing for a man built like he wrestles sharks for sport. Perhaps he was being careful to avoid crushing POLITICO’s own flimsy extremity. Or maybe when it comes to kinetic greeting-based monetary policy signaling he didn’t want to overplay his, ahem, hand.

Bottom line: Knot will keep hiking, for sure, but he won’t be pounding the economy into bitterballen.

Rating:

3. Christian Kettel Thomsen, Danish central bank governor.

Governor: Christian Kettel Thomsen, the owlish, bespectacled governor of the central bank of Denmark.

Handshake: N/A. POLITICO idiotically mistook Governor Thomsen for a journalist we had bumped into in the toilet. Concerns around post-bathroom hygiene, combined with the misidentification of a relatively prominent public figure, made the situation much, much too awkward for a handshake.

Bottom line: C’mon, it’s Denmark. He’ll just follow the ECB.

Rating: N/A. (Though a covert look at his hands suggested that they would have done a fine job.)

4. François Villeroy de Galhau, Banque de France governor and by all accounts un type bien.

Handshake: When we extended our hand, Villeroy’s response was, we hate to say it, feeble. He barely made contact, with his thumb and forefinger sort of helplessly clawing at the bottom fifth of POLITICO’s palm for half a second until he gave up and withdrew. It was like he was trying to caress a wasp.

Bottom line: Handshake aside, he’s French, so he’ll do whatever the hell he wants on rates. (In fairness — regarding the handshake — we did catch him by surprise.)

Rating:

5. Andrew Bailey, the surprisingly approachable Governor of the Bank of England.

Handshake: Erratic but endearingly eager to please, not quite achieving full contact but making up for it with classic English-grammar-school-boy confidence. Like shaking hands with a precocious 12-year-old spelling bee champion.

He also copped to subscribing to Morning Central Banker, though he claims he doesn’t know how much his organization is paying monthly for it. He made a comment to the effect of “I’m not in charge of how the bank spends its money,” or something similarly ironic and self-deprecating.

Bottom line: Evidently a handshake that feels it ought to tighten more but just isn’t quite there yet.

Rating:

As an MCB subscriber Bailey is obviously entitled to our discretionary 400 basis-point handshake-uplift. Ok, just kidding. That would “taint the indicator,” as our statistics guru Izabella Kaminska puts it. Let’s give Bailey a robust 3.5, because enthusiasm counts.

6. Jerome Powell. Chair of the Federal Reserve, spotted for roughly five seconds.

Handshake: “Chair Powell!” POLITICO yelled against the din of five Chinook CH-47 heavy-lift helicopters as “Fortunate Son” blazed from a pair of airborne speakers. Powell did not turn back to look, nor acknowledge, and least of all shake hands, as he strolled imperiously and Americanly into the conference venue.

Bottom line: Gutless absence of handshake indicates Fed tightening will end much sooner than necessary, likely concurrent with the minting of some kind of quadrillion-dollar adamantine coin, hyperinflation and the disorderly collapse of dollar hegemony.

Rating:

7. Bostjan Vasle, of the Slovenian central bank.

Handshake: While solid across key indicators like grip, strength and duration, Vasle’s handshake was not especially convincing, with weak underlying eye contact. We can’t rule out that the governor was trying to continue his more fruitful interaction with the Reuters/Bloomberg/PR hack who was then occupying him, and didn’t want to enter into some kind of unmanageable polyconversation.

Bottom line: Here is a man too easily unsettled by fresh inputs. A crucial swing voter in September.

Rating:

8. Mārtiņš Kazāks, of the central bank of Latvia.

Handshake: A highly serviceable handshake which we had assumed would be transitory but it dealt out a surprisingly hard landing.

Bottom line: He’s not out to make a reputation of himself but he won’t shy away from a firm monetary grip.

Rating:

9. Edward Scicluna, Governor of the Bank of Malta.

Handshake: Avuncular and unforced, if not exactly revolutionary. The kind of understated handshake you might share with your GP after the colonoscopy goes smoothly enough and you both want to move on briskly.

Bottom line: The shake may have been warm, but it wasn’t a shake to shake markets. Another swing voter come September.

Rating:

10. Joachim Nagel, Deutsche Bundesbank president.

Handshake: To our great regret, the opportunity to test the famous steady hand of German monetary policy didn’t present itself. However, we’re fairly sure we heard the microphone squeak with discomfort in Nagel’s grip as he made a rather Angst-ridden contribution to the Q&A on energy markets.

Bottom Line: We’re just glad we didn’t have to risk it.

Rating: N/A but frankly, we don’t think there’s much mystery about this one. Doesn’t have a vote at the September meeting anyway.

11. Christine Lagarde, the ECB’s Madame La Présidente.

Handshake: Your fin-pumping correspondent was so taken by the sudden appearance of global finance’s best-known bossgirl at the double-doors of the Ritz-Carlton Penha Longa that his own handshake failed him, resulting in abject greeting dynamics. Evidently unimpressed and quite possibly a little disgusted, Lagarde retreated swiftly into the lobby from which POLITICO had been summarily banished.

Bottom line: She was not here to close the shake. One more hike and this cycle is done.

Rating: N/A, handshake was compromised.