Comments from Powell in the Q&A:

  • Still 'some ground to cover' before substantial further progress achieved
  • It is clear inflation will be running at 2% for the months ahead
  • Repeats 'some ground to cover'

The new messaging is 'some ground to cover' rather than 'still a ways to go' on substantial further progress. The market is taking this as dovish but I'm not so sure. It sounds like a fall taper announcement is possible. At the same time, if you were worried about a taper announcement today or at Jackson Hole, you can strike off that risk

  • We're clearly 'a ways away' from raising interest rates; it's not on our radar now
  • Says he has 'some confidence' that medium term inflation will fall back
  • Bond moves might be related to delta. Also cites technical factors and fall in expected inflation compensation

Another interesting twist was on inflation questions he twice deferred to the FOMC. To me, it sounds like he stridently believes inflation is temporary but that's not a view that's totally shared by the committee.

  • We're clearly on the path to a very strong labor market
  • It's unusual to have such a high rate of vacancies to workers
  • There may be a speed limit with people finding new jobs, it takes time; it's about job selection
  • Suspects impacts of delta wave will be less but we will have to wait and see
  • Delta could slow the economy down for a period of months or not
  • There's a range of views on what timing will be appropriate
  • Today was the first deep dive on the timing
  • I'm not meaning to suggest anything on the timing of taper; there's a range of views
  • I'm not in any position to provide any guidance on the timing of the taper
  • We're talking about tapering right now, we'll take it meeting by meeting
  • There is little support for tapering MBS before Treasuries
  • Inflation has been driven by a supply side shock

Quotable on tapering:

"Today I've given you what I can give you because this was the first really I would say deep dive on the issues of time and pace and composition and it was a good meeting. No decisions were made."