So where down or up?

Powell's speech.

What did Powell say and what signal does it give

1. Stubbornness with both risks

Powell noted that there are two-sided risks: on one hand — a slow deterioration in the labor market (rising unemployment, declining hiring rates), on the other — inflation, which has not yet come down to the target.

2. The rate is “modestly restrictive”

The Fed recently lowered the rate, but Powell explained that the current level of policy is still noticeably restrictive (i.e., not “dovish”). This means that easing (additional cuts) will be cautious and dependent on the data.

3. Warning against too rapid easing.

He clearly hinted that if the Fed takes too rapid a path of rate reductions, inflation could become an issue again. Therefore, they are not ready to go “all in” until there are signals that inflationary pressure is truly weakening.

4. Assessment of the stock market.

Powell said that stocks seem “fairly highly valued” — meaning there is a possibility of a correction in the event of a negative shock or worse-than-expected economic news.

Conclusions: where the markets may go.

Based on this:

• Short-term (over the next few weeks) — likely a decline or volatility: investors react to uncertainty, to data about deterioration in the labor market or inflation.

• Medium-term — a possible moderate recovery, if the data indeed shows that inflation is decreasing, and jobs are still holding up. But the risks lean more towards having to wait longer than previously expected, and that easing will be measured.