Federal Reserve

The rates were left unchanged as expected and the Fed recognised a 'moderation' in the pace of the US recovery in recent months. One month term repo ops would no longer be offered after February 09, but Fed ready to adjust repo operations as appropriate. In the press conference Fed's chair Powell said that he considered real levels of unemployment to be closer to 10% in the US.

On bond tapering

Powell stated that it was 'too early to talk about tapering' and that more could be done with bond purchases. This was the right message for the market to hear and hit the right dovish note.

On inflation

Powell said the Fed will not react to small and transient inflation rises. No comment on exact levels as you would expect, but that the Fed would 'welcome' higher inflation. That's the sort of comment that can come back to bite you in the world of politics. However, in the context we are in, Powell simply means a little inflation can be absorbed before the Fed is obliged to raise rates.

On GameStop

No comment. The fact that Powell was asked about GameStop at all shows how rattled some cages were by the whole saga. For now, business is back to normal and GameStop shares are way of their lofty heights.