A recap of Fed Chief Powell’s market-moving comments on rates & inflation

Federal Reserve Chairman Jerome Powell ended the press conference after speaking and answering questions for about one hour. — Thomas Franck

Asked if the only additional economic stimulus could come from Congress, Fed Chair Powell assured investors that the central bank had plenty of tools of its own to boost the economy.

"I certainly would not say that we're out of ammo," Powell said at the press conference following the FOMC statement. "Not at all."

"First of all, we do have lots of tools, we've got the lending tools, we've got the balance sheet, we've got forward guidance. There's still plenty more that we can do. We think that our rate policy stance is an appropriate to support the economy. We think its powerful....But again we have the other margins tat we can still use. So no, certainty we're not out of ammo," Powell added. — Maggie Fitzgerald 

U.S. equities markets lost momentum in afternoon trading despite initially rising to session highs after the Fed's latest policy decision. Tech stocks sold off and led the S&P 500 into negative territory around 3:15 p.m. ET even as Fed Chairman Jerome Powell continued to outline easy monetary policy for the years ahead.

The Dow still traded about 100 points higher while the Nasdaq Composite lost 0.8%. Apple shed 2.1%, Microsoft lost 1.1% and Facebook slipped 3.2%. — Thomas Franck

Asked whether he thinks more fiscal stimulus from Congress is necessary to sustain the economic recovery, Powell said he thinks certain areas of the economy will continue to struggle without aid. He added that the vast majority of private forecasters anticipate substantial additional fiscal support.

"My sense is that more fiscal support is likely to be needed. Of course, the details of that are for Congress, not for the Fed. But I would just say there are roughly 11 million people still out of work due to the pandemic and good part of those people were working in industries that are likely to struggle. Those people may need additional support as they try to find their way through what will be a difficult time for them," he said.

"So again, I would say the fiscal support has been essential in the good progress we see now and finally I'll note just about all — the overwhelming majority — of private forecasters who project an ongoing recovery are assuming there will be substantial additional fiscal support," Powell said. — Thomas Franck

Equities rallied to new session highs after Powell said the Fed will keep interest rates near zero until U.S. inflation rises above its 2% target for an unspecified duration of time.

"We expect to maintain an accommodative stance of monetary policy until these outcomes, including maximum employment, are achieved," Powell said.

"With regard to interest rates, we now indicate that we expect it will be appropriate to maintain the current zero to 0.25% target range for the federal funds rates until labor market conditions have reached levels consistent with the committee's assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time." 

The Dow rose after Powell's comments, up about 350 points at session highs. The Fed slashed rates earlier in 2020 to help businesses cope with the impact of the Covid-19 pandemic. — Thomas Franck

Federal Reserve Chairman Jerome Powell began speaking to reporters at 2:30 p.m ET and is expected to answer questions about the central bank's latest decision and economic outlook. — Thomas Franck

Both the Dow Jones Industrial Average and the S&P 500 raced to session highs following the release of the Fed's statement as investors snapped up stocks on the prospect of years of lower borrowing costs.

The S&P 500 gained 0.6% to trade around 3,421 while the Dow added 290 points to about 28,290. Stocks sensitive to the health of the U.S. economy outperformed the broader market with so-called cyclical names in the energy and financials sectors leading the indexes higher. 

Occidental Petroleum and Diamondback Energy each soared more than 10% in afternoon trading. Citigroup, Capital One and Wells Fargo all advanced at least 3%. — Thomas Franck

In addition to promising to keep interest rates low, Fed officials also changed their economic forecasts to reflect a smaller decline in GDP and a lower unemployment rate in 2020. That tweak to the outlook comes after stronger economic data during the third quarter.

The Fed since March introduced a variety of tools aimed at keeping markets functioning and the economy stable. It's embarked on about a dozen lending and liquidity programs and begun a new policy regime in which the Fed will allow inflation to run somewhat above the 2% target rate.

The unemployment rate has fallen from double digits to around a still-elevated 8% as of the August employment report, released earlier this month.

"With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved," the post-meeting statement said. — Jeff Cox, Thomas Franck

The Federal Reserve announced on Wednesday that it will keep interest rates near zero for years until the U.S. economy heals from the effects of the Covid-19 pandemic and the labor market normalizes. 

The Dow Jones Industrial Average rose more than 250 points to session highs in the minutes following the Fed's statement. — Jeff Cox, Thomas Franck

The Federal Reserve isn't expected to take any new actions at its final meeting before the presidential election and will likely reiterate its commitment to easy monetary policy and low interest rates until the economy fully recovers from Covid-19.

The central bank will wrap up its two-day meeting Wednesday afternoon and issue a statement at 2 p.m. ET describing its plans for rates in the months ahead. Chairman Jerome Powell will address reporters at 2:30 p.m. ET and answer questions from the press.

Powell will likely avoid questions related to the 2020 elections, but may reiterate his belief that additional fiscal stimulus from Congress could offer stability for parts of the U.S. economy.

The Fed will also for the first time present its economic and interest rate forecasts for 2023. That forecast is expected to show the central bank will be keeping interest rates at zero for years.

"They're not moving interest rates through 2023, and that in itself, is going to be viewed as a dovish recommitment," said Rick Rieder, chief investment officer of global fixed income at BlackRock. — Patti Domm, Thomas Franck