There are divergent interpretations of Powell's speech. The stock market response was clear, 'buy with ears pinned back'.
But, there a range of views on the speech. I posted SG and BMO responses here:
A few more responses:
TD:
- rally following Powell's interest rates "just below" neutral is overstating the dovishness of his comments
- says yes, the statement is different to his October comment on Fed "a long way" from neutral, but the market is seizing on any comment they can that suggests there'll be a pause
- Powell also mentioned the positives on the economy & the outlook
Capital Economics:
- don't think (Powell) was dovish, not really
- didn't say inflation was weaker or the economy was weaker than we thought
- a bit of an market overreaction
Pantheon Macroeconomics:
- Chair Powell … actually said … rates are "just below the broad range of estimates of the level that would be neutral". This is just a simple statement of fact
Marc Chandler:
- (the market purposefully) misinterpret Powell's comments
- Not just below neutral as many say they heard, but below broad range of estimates of neutral level, which Sept SEP saw as 2.5%-3.5%
- No sign that bottom of range appropriate
- Powell (is) not signalling one and done
CIBC:
- The Fed has said they wanted to go above neutral. If they wanted to be neutral, they could have walked that back
Oxford Economics:
- an interpretation that Powell's comments is some sort of signal that Fed will pause after a December hike is not correct
Joe LaVorgna:
- Powell sees solid economic growth … interest rates are "just below" neutral
- suggests that the Fed could pause after next month's rate hike
Westpac:
- Powell sounded more cautious about future rate hikes
Plenty there to choose from!
