By Andrew Moran

The Federal Reserve concluded its widely anticipated May Federal Open Market Committee (FOMC) policy meeting on May 1. Financial markets were unsurprised to see that the US central bank left its benchmark rate unchanged at a 23-year high of 5.25% to 5.5%. But while the decision everyone waited for was the day’s main event, the FOMC statement and Chair Jerome Powell’s post-meeting press conference were the critical attractions for Wall Street, Main Street, and the White House.

Stocks were little changed when the Fed issued its final decision. Markets even shrugged off the Eccles Building’s move to slow the pace of its balance sheet runoff campaign (more on that later). However, minutes into Powell’s press conference, equities soared higher than a SpaceX rocket. Why? There was one statement that traders were waiting for him to utter: “I think it’s unlikely that the next policy rate move will be a hike. I’d say it’s unlikely.”

When reporters asked Powell what he and his team would need to see to entertain the idea of a rate increase, he responded: “I think we’d need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time. That’s not what we think we’re seeing.”

At the same time, the Fed chief admitted that the central bank is not gaining “greater confidence” that inflation is progressing this year, meaning that it will likely “take longer than previously expected” to bring inflation back down the entity’s 2% target rate. The Fed, Powell noted, is ready to keep policy restrictive “for as long as appropriate.”

Because he insisted that no rate hikes were coming and that the peak in the tightening cycle had been reached, the leading benchmark indexes soared as much as 1.4% before paring most of these gains. Still, it was a testament to how powerful the Fed is and how a few words can ignite a........

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