Comments from Powell at the Economic Club of New York

  • No pre-set policy path
  • Impact of hikes uncertain, may take a year or more to see
  • Gradual pace meant to balance risks of too fast or slow
  • Interest rates still low by historical standards
  • Gradual hikes balance risks to forecast
  • Great deal to like about US economic outlook
  • Expects solid US growth, low employment and near-target inflation
  • Paying 'very close attention' to data
  • Concerned about leveraged corporate borrowing, which could exacerbate economic downturn
  • No dangerous excesses in stock market

The US dollar is getting beaten up on the 'just below' comment and no preset path.

Full quote:

"While FOMC participants' projections are based on our best assessments of the outlook, there is no preset policy path. We will be paying very close attention to what incoming economic and financial data are telling us."

Other key line:

"We therefore began to raise our policy rate gradually toward levels that are more normal in a healthy economy. Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy‑‑that is, neither speeding up nor slowing down growth."

As you can see in the market, this is dovish. Definitely more dovish than I expected. His references to gradual hikes are generally in the past tense.

  • "Our gradual pace of raising interest rates has been an exercise in balancing risks."
  • "Our path of gradual increases has been designed to balance these two risks."
  • "We therefore began to raise our policy rate gradually toward levels that are more normal in a healthy economy."
  • "We also know that the economic effects of our gradual rate increases are uncertain, and may take a year or more to be fully realized."

Perhaps equally important is that he hardly mentions the gradual pace at all. Those are the only references.