More Than Just the Bips

For the most part, strategists pegged the rally on Powell's rejection of a 75 basis-point hike. But there was a lot more to today's press conference, both in tone and substance. 

Powell began his remarks by saying he wanted "to speak directly to the American people."

"Inflation is much too high. And we understand the hardship it is causing. We're moving expeditiously to bring it back down." 

Powell returned to that idea multiple times in the press conference, an indication that he was taking the inflation threat more seriously than ever. It marked a clear break from his once controversial comments labeling inflation as "transitory." 

Powell also expressed confidence that the Fed was on a path to tame inflation without triggering a recession. "I think we have a good chance to have a soft or soft-ish landing or outcome," Powell said. 

Here are some other highlights from Powell's press conference: 

On avoiding recession: "Businesses are in good financial shape. The labor market is, as I mentioned, very, very strong. And so it doesn't seem to be anywhere close to a downturn. ... The economy is strong and is well positioned to handle tighter monetary policy. But I'll say I do expect that this will be very challenging, it's not going to be easy, and it may well depend, of course, on events that are not under our control. But our job is to use our tools to try to achieve that outcome, and that's what we're going to do."

On whether inflation has peaked: "We've seen some evidence that the core PCE inflation is perhaps either reaching a peak or flattening. We'll want to know more than just some evidence. We'll want to really feel like we're making some progress there."

On inflation's pain: "Some of us are old enough to have lived through high inflation and many aren't. But it's very unpleasant. It's just something people don't [expect] when they experience it for the first time. You're paying more for the same thing. If you're a normal economic person, then you probably don't have that much extra to spend, and it's immediately hitting your spending on groceries, on gasoline, on energy, and things like that. So we understand the pain involved. ... It's our job to make sure that that inflation of that unpleasant high nature doesn't get entrenched in the economy."

On Paul Volcker and his 1980s inflation fight: "Who isn't an admirer of Paul Volcker? I shouldn't be singled out in this respect, but I knew him just a little bit and have tremendous admiration for him. And I would phrase it this way: He had the courage to do what he thought was the right thing. That's what it was. It wasn't any particular thing. It was that he always did what he thought was the right thing."

On working with White House and Congress: If Congress or the administration has ways to help with inflation, I would encourage that. But I'm not going to get into making recommendations or anything like that. It's really not our role. We need to stay in our lane and do our job. When we get inflation back under control, then maybe I can give other people advice. Right now, we need to just focus on doing our job."