Under no pressure to throw investors a bone, Jerome Powell nevertheless did, igniting the biggest stock market rally on the day of a Federal Reserve meeting in a decade.
All it took was a few phrases in a day otherwise rife with hawkish pronouncements from a central bank bent on subduing the hottest inflation in 40 years. While stocks initially wobbled on confirmation the Fed had pushed up interest rates by 50 basis points, the S&P 500 took off when Powell said an even bigger increase is “not something that the committee is actively considering” for coming meetings.
Market sentiment may also have gotten a boost when Powell said policy makers consider the fed funds rate that is neutral for the economy to be between 2% and 3% — within the scope of expected hikes this year at least. Few market participants expect the central bank to stop there, though some bulls may have emboldened by the fact the Fed chair didn’t specify a higher threshold.
