Fed recap: Powell was hawkish in the short-term but dovish in the long-term
Powell made two big comments
The FOMC decision and press conference in a big whipsaw in markets.
Part 1: Monetary policy is in a good place
The US dollar initially fell on this headline and his repeated mentions that it would take a 'material' shift to cut again. That means a cut in the next few months is unlikely and it underscores that we're at the end of the mid-cycle adjustment.
Part 2: Significant inflation rise needed before any rate hike
Everything turned around on this comment.
"We've just touched 2% CORE inflation to pick one measure, & then we've fallen back. So I think we would need to see a really significant move up in inflation that's persistent before we would even consider raising rates to address inflation concerns."
This is sensational news if you're optimistic about growth next year and beyond. It means that so long as Powell is in charge of the Fed and inflation is under control, we're not likely to see a rate hike.
The USD/JPY chart shows it all clearly:
The big takeaway:
Powell: If there is bad news, we'll cut but if there is good news we won't hike. It's a one-way bet and it's a wonderful scenario for equities and a straight Powell put.