5 key take-outs from Fed Chair Powell's latest speech

On 30 November, Fed Chair Powell delivered a speech entitled, Inflation and the Labor Market, at the Hutchins Center on Fiscal and Monetary Policy. Markets surged on the back of this speech, with the S&P 500 closing over 3% higher. Gold and many government bond prices also saw strong gains.

After reviewing Powell’s speech and the market reaction, here’s my 5 key take-outs:

1) Powell did not outline a more aggressive terminal rate tilt

While other Fed speakers have spoken about the potential need for a much higher terminal rate in recent weeks, Powell instead reiterated his previous vague commentary, again simply stating that he believes that the terminal rate will likely be higher than thought at the time of the Fed’s September Summary of Economic Projections (SEP). The FOMC’s September projections had outlined a median terminal rate forecast of 4.6% in 2023.

The market has thus already been pricing in a higher terminal rate than the September FOMC projection for some time. Before Powell’…