A recap of Fed Chief Powell’s comments on interest rates & inflation

Powell wrapped the press conference around 3:25 p.m. after taking questions from reporters for about 45 minutes.

— Thomas Franck

Fed Chairman Jerome Powell once more pushed back market speculation that the Fed could taper its bond purchases.

Powell, in his press briefing, said talk of tapering is "premature" and the Fed would have to see improvement towards its goals before it would consider cutting back on purchases.

The 10-year Treasury yield was barely changed.

"The price action has been muted. I would say that's just confirmation of what we knew," said Ian Lyngen of BMO. He said speculation about the Fed's bond buying was initially raised by some Fed presidents, but Fed Vice Chairman Richard Clarida ended it when he said he thought the pace of purchases through the end of the year was appropriate.

Powell made a similar comment and reaffirmed it at his briefing.

—Patti Domm

Powell said fears the Fed may soon begin to consider curbing its monthly asset purchases are "premature" and encouraged investors to take him at his word that the central bank will provide support as long as necessary.

"The whole focus on exit is premature if I may say. We're focused on finishing the job we're doing, which is supporting the economy, giving the economy the support it needs."

—Thomas Franck

Powell said he expects to see inflation readings tick higher in the coming months because of low prices last year during the start of the pandemic and a potential burst in consumer spending as vaccines allow the economy to reopen further. However, the spike in inflation would likely be "transient," Powell said.

"We're going to be patient. Expect us to wait and see and not react if we see small, and what we would view as very likely to be transient, effects on inflation," Powell says.

Powell reiterated that the Fed would allow inflation to rise above 2% for some time.

— Jesse Pound

CNBC's Steve Liesman asked Powell another question about speculative stock trading and if he thought the Fed's actions could be causing instability in the equity market. The central banker said he did not think that monetary policy was the main factor in frothy trading.

"There are many things that go into, as you know, setting asset prices. If you look at what's really been driving asset prices in the last couple of months, it isn't monetary policy," Powell said. "It's been expectations about vaccines, and it's also fiscal policy."

"The connection between interest rates and asset values is probably something that's not as tight as people think because a lot of different factors are driving asset prices at any given time," the Fed chair added.

— Jesse Pound

Powell was asked first about the eye-popping rise and wild short squeeze in GameStop shares. He skirted the issue with one sentence: "I don't want to comment on a particular company or day's market activity."

—Thomas Franck

Fed Chair Jerome Powell kicked off the press conference by reading through the central bank's policy statement and offering an outlook on the U.S. economy.

Powell said early in his address that the Fed expects to keep monetary policy accommodative until the economy returns to or nears full employment. He also said the central bank will continue its regular schedule of bond purchases but did not specify for how long.

—Thomas Franck

Market pros found nothing new in the Fed's statement, and are now awaiting for Federal Reserve Chairman Jerome Powell to address asset bubbles.

Michael Arone of State Street Global Advisors said the market is waiting for Powell to answer two questions. One is when it will taper its bond program.

"The question that seems to be more important now is the Fed's role in fueling asset price bubbles. The housing market is on fire and you're starting to see the activity in Gamestop [and other heavily shorted stocks]," said Arone. He said the chairman will likely be pressed on this question several times during his briefing.

Market pros say they will be listening to hear whether Powell is concerned about frothy financial conditions, which have been made extremely easy by the Fed.

--Patti Domm

The Federal Reserve decided to keep interest rates near zero in its first meeting of 2021 as the U.S. economy continued to struggle under the impact of Covid-19. The central bank also doubled down on its commitment to buy massive quantities of bonds until the U.S. economy is stable.

Given that the Fed's official statement was virtually identical to its prior statement from December, investors will likely keep a close eye on what Chairman Jerome Powell says during his scheduled press conference at 2:30 p.m. ET.

—Thomas Franck

The Federal Reserve is expected to have made no policy changes during its January meeting

Investors expect that the Fed, which will publish its decision at 2 p.m. ET, will acknowledge some weakening of the economy and reiterate that it will keep interest rates low for a very long time. Fed Chairman Jerome Powell speaks at 2:30 p.m., and investors will be intently listening to what he has to say about the Fed's bond-buying program.

The Fed chairman has already quashed market speculation that the Fed could consider tapering the purchases, but market pros will weigh closely how emphatically he speaks about continuing the program at its current pace.

The Fed buys $80 billion in Treasurys a month plus $40 billion in mortgage securities in an effort to keep markets flushed for cash and encourage investors to stomach risk during the Covid-19 pandemic.

Some strategists expect Powell to sound very dovish, which could drive bond yields lower. The 10-year Treasury yield was just above 1% in afternoon trading; if it falls below that psychological level, it could trigger a technical move toward 0.9%.

Bond yields fall as their prices rise.

— Patti Domm