Powell's presser - key takeaways

Fed Chair Jerome Powell began its post-meeting press conference at 6:30 pm GMT. Decision itself was in-line with market expectations but changes in the accompanying statement were taken as dovish. As a result the US dollar dropped while gold and indices gained. Hawkish bets for December meeting were pared and now the market sees 50 bp rate hike in the final month of the year as the most likely outcome. Key takeaways from Powell's presser:

Opening remarks

• We remain committed to lowering inflation
• Restrictive policy is still needed for some time
• US economy has slowed significantly since last year
• Labour market remains tight
• Longer-term inflation expectations seem well-anchored
• Inflation remains above Fed's goal, recent  inflation data was hotter-than-expected
• Demand still outpaces supply
• Financial conditions tightened in response to Fed's actions
• Fed will take into account cumulative tightening and policy lag
• It will be appropiate to slow rate hikes at some point
• Significant uncertainty surrounds future level of interest rates
• Incoming data suggest that ultimate level of rates will be higher than previously anticipated
• Fed will stay on tightening course until job is done

Remarks on the ultimate level of rates have led to a full reversal of post-decision moves on indices. EURUSD remains higher.

Q&A session

• We will be looking at real rates and other financial conditions
• Moment to slow rate hikes may come as soon as next meeting or later
• No decision on slowing rate hikes was made
• When to moderate rate hikes is less important than how far rate will go
• Rate hikes were successfull
• Don't think we have overtightened policy
• Financial conditions tightened quite a lot
• Likely that Fed will discuss smaller rate hike at December meeting
• Long-term inflation expectations moved back down
• Short-term inflation expectations moved up
• If we overtighten policy, we have tools to respond and support the economy
• Premature to think about pausing rate hikes
• We keep looking for softening in jobs data but its not there yet
• World won't be better off if Fed fails on inflation mandate
• Price stability in the United States is good for global economy
• No sense that inflation is going down already
• Window for 'soft landing' has narrowed but its still possible
• No one knows if recession will occur

Wall Street indices and European index futures continued to move lower throughout the Q&A session as Powell showed no signs of any pivot.  US dollar also regained ground with EURUSD now trading where it was just before policy decision announcement at 6:00 pm GMT.