The market interpreted it as dovish:
• Acknowledged that rates are already in restrictive territory
• Indicated a "cautious" adjustment to policy
• Left room for future easing
Powell stated: "The stabilization in the unemployment rate and other labor market indicators allows us to proceed carefully as we consider adjustments to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and evolving risk balance may suggest it is time for us to adjust policy stance."
The market interpreted it as dovish:
• Acknowledged that rates are already in restrictive territory
• Signaled that policy could be adjusted "carefully"
• Left room for future easing
The market is essentially trading on Powell’s remark that "it may be time for us to adjust policy stance."
Powell stated: "The stabilization in the unemployment rate and other labor market indicators allows us to proceed carefully as we consider adjustments to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and evolving risk balance may suggest it is time for us to adjust policy stance."
