Key takeaways from the Fed rate decision and Powell’s news conference

Here are the key takeaways from the Federal Open Market Committee’s interest-rate decision and Chair Jerome Powell’s news conference Wednesday:

• As expected, policymakers lifted rates by a quarter point to a target range of 5.25% to 5.5%. While this week’s increase followed a pause at the last meeting, Powell pushed back against the idea that the Fed will now move to a pace of raising rates at every other meeting, noting that officials could either keep rates steady in September or they could raise rates again at that meeting.
• Powell said officials will be data dependent. With a longer interval of eight weeks before the September meeting, policymakers will have two more jobs reports and two more consumer price reports in hand by that gathering. It will be interesting to see whether he uses the Jackson Hole conference next month to send a stronger signal about the direction of future policy.
• The Fed chief said officials welcomed the consumer price report showing that inflation rose by 3% in the 12 months through June. But he said officials are trying not to read too much into any one month of data. A stronger economy bring stronger inflation down the line, Powell said, adding that the process of getting inflation down to 2% has a long way to go. This shows officials do not want to stop their tightening campaign too early.
• The statement mildly upgraded the assessment of the economy to say activity has been expanding at a “moderate pace,” compared to June’s “modest” pace. Powell also shared that the Fed staff is no longer have a recession in their projections, which are independent of those issued by policymakers. But Powell repeated a cautionary note multiple times that we will likely need to see more softness in the labor market before inflation comes down.
• Bond yields dropped, with the two-year US yields, sensitive to imminent Fed moves, falling to 4.84%. US equities rallied during the press conference before reversing gains with the S&P 500 and the tech-heavy Nasdaq 100 resuming losses.