At his press conference following the Federal Open Market Committee (FOMC) statement on Wednesday Federal Reserve System Chair Powell mentioned the "disinflation" word 13 times.
After the December FOMC meeting, at his presser, Powell said that word, let me count, zero times.
For those divining nuance from the words of a Fed Chair this is the equivalent of being hit by a freight train. It's a monumental change in tone.
Morgan Stanley have responded sharply, and are forecasting a pause from the Federal Open Market Committee (FOMC) at its next meeting:
- The disinflationary process is underway and combined with a weaker labor market we think the incoming data and forecast revisions to the March SEP will lead the Fed to pause at its next meeting.
If you missed the FOMC on Wednesday and need a catch up:
- Federal Reserve hike rates by 25 basis points, as expected
- Powell opening statement: We have more work to do
- Powell Q&A: It is important that financial conditions reflect policy restraint in place
- Powell opens the door to rate cuts this year "if inflation comes down much faster"
- A comparison of the December 2022 FOMC statement to the February 2023 statement
- The full FOMC statement from the February 2023 Federal Reserve meeting
And, a small collection of responses:
- FOMC responses - inflation still high, more +25bp hikes ahead
- Forecast for a FOMC March meeting 25bp hike, then on hold at 4.875% the the end of 2023