Well, at least it wasn’t a nothing done? It was short and not very sweet. An address that was expected to last 30 minutes barely reached 10 and quite frankly, the Fed Chairman probably didn’t even need that long. The funereal look on Jerome’s face suggested “good” news was not coming and on that front at least, he delivered. It’s been a series of fits and starts for the market as investors have listened to (and subsequently ignored) what the Fed intends to do. The collective “No we haven’t” we heard when the Street started prematurely assuming a pivot was in place had been recognized and corrected for. Or so we thought. We are always parsing Mr. Powell’s language for clues within the message and his phrase “requires using our tools forcefully” is one that surely stood out. While we didn’t get further clarity on an increase of the funds rate ceiling, nor did he allude to one, the prospect for elevated rates for far longer than the market expected was clear. Despite various data points pointing to peak inflation having passed, the Fed is far from comfortable with the current level of inflation and will result in a restrictive policy stance for some time. And for good measure, Kashkari continues to enjoy his view from the cheap seats (non-voting) as he called inflation a “raging inferno.”
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