Wall Street investors waited Tuesday to read the tea leaves in the latest public comments from Fed chief Jerome Powell, and they seem conflicted about the message. After Powell said the process of getting inflation in check was showing progress, the Dow quickly erased morning losses and rose more than 200 points into positive territory. Within a half-hour, it was back in the red again. “The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy,” Powell said at a DC event, per CNBC. “But it has a long way to go. These are the very early stages.”
The latter qualification might have tempered the happy mood a bit, and Powell gave no indication on when the central bank will stop raising rates. Still, he said, "we expect 2023 to be a year of significant declines in inflation. It’s actually our job to make sure that that’s the case." He estimated inflation wouldn't get down to the Fed's goal of 2% until next year—the rate is currently more than three times higher than that. Powell also said the Fed was surprised by last week's booming jobs report, per Reuters, though he declined to say whether that would have affected the Fed's decision to raise rates by "only" 0.25%, a decline from earlier hikes. “It kind of shows you why we think this will be a process that takes a significant period of time,” Powell said, per the Wall Street Journal. (More Jerome Powell stories.)
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