• It’s too soon to say what will be the appropriate path for monetary policy
• Tariffs likely to raise inflation in coming quarters; more persistent effects possible
• Becoming clear that tariffs will be significantly larger than expected, the same is true of the economic effects
• More measures of long-term inflation remain well-anchored
• Obligation is to make certain that one-time increase in price levels doesn’t become an ongoing inflation problem
• Outlook is highly uncertain, with elevated risks of higher unemployment and higher inflation
• Surveys show dimming expectations, higher uncertainty due to new Federal policies, especially trade
• Fed is closely watching tension between hard and soft data

There will be a Q&A after the speech. The kneejerk reaction has been a modest decline in rate cut probabilities in the near term. Risk assets have edged lower.

This is about what I expected to hear but markets are pricing in a 40% chance of a cut in May and 31 bps in June. That means that markets see a dovish shift from the Fed in the next month. That didn’t come today as Powell mostly punted with these comments.

Still, the worst-case scenario was avoided, where he might say that tariffs would boost inflation and make it impossible for the Fed to cut rates.