“The time for moderating the pace of rate increases may come as soon as the December meeting,” Powell said in the text of his speech. “Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”

Policy-sensitive 2-year Treasury yields fell on Powell’s remarks, erasing increases on the day, and the S&P 500 index reversed losses to trade higher. The dollar slipped in value against major rivals on foreign-exchange markets.

The Fed’s actions -- the most aggressive since the 1980s -- have lifted the target range of their benchmark rate to 3.75% to 4% from nearly zero in March. Powell said rates are likely to reach a “somewhat higher” level than officials estimated in September, when the median projection was for 4.6% next year. Those projections will be updated at the December meeting.

Eoin Treacy's view

Jerome Powell confirmed today that the pace of Fed hikes will moderate; not reverse or pause. Nevertheless, cashed-up traders are more than willing to take anything less than outright hawkishness as good news.

The Nasdaq-100 rebounded impressively to unwind three days of declines and to further close the gap with the trend mean.

The Dow Jones Industrials Average has broken its 11-month sequence of lower rally highs.


The Dollar’s reversed an earlier gain and lent support to gold in the process.

Following a yield curve inversion it is quite normal for markets to rebound in an impressive manner because there is a significant interval between when tightening starts and when the full effects are felt. That sweet spot is where markets are placed right now.