Fed recap: All the market-moving comments from Fed Chair Powell after rate hike

Financial conditions seem to have tightened more than the U.S. benchmark indexes indicate, Federal Reserve Chair Jerome Powell said during Wednesday's press conference.

"The traditional indexes are focused a lot on rates and equities, and they don't necessarily capture lending conditions," Powell said when asked what financial situation would warrant an interest rate cut, especially if credit conditions were to further tighten. Concerns of a credit crunch, which occurs when banks significantly tighten their lending standards, have grown amid the banking crisis.

If tighter lending conditions are sustained, Powell acknowledged that could easily have a significant macroeconomic impact which would be factored into the Fed's policy decisions.

"The question for us though is how significant will that be and what would be the extent of it and what would be the duration of it," he said, adding that "rate cuts are not in our base case."

— Pia Singh

Federal Reserve Chair Jerome Powell said it's "too early" to say what effect the banking crisis will have, but the central bank leader expects a pathway "still exists" to a soft landing.

"It's too early to say, really, whether these events have had much of an effect," said Powell, adding that credit standards and credit availability will be affected the longer the banking crisis continues.

"I do still think though that there's, there's a pathway to [a soft landing]," he added, saying "I think that pathway still exists, and, you know, we're certainly trying to find it."

— Sarah Min

The three major indexes dipped to their lows for Wednesday during Federal Reserve Chair Jerome Powell's press conference.

The Dow Jones Industrial Average dipped by as much as 271.53 points during the presser, shedding 0.83%. The S&P 500 and the Nasdaq Composite also slipped by 0.75% and 0.59% during their respective lows of the day.

The major averages began to curtail those losses after the Fed Chair's question and answer session wrapped up, with the Dow down 0.2% as of 3:23 p.m. The S&P 500 is flat, and the Nasdaq is up 0.2%.

-Darla Mercado

Fed Chair Jerome Powell tried to assure Americans that their bank deposits will be kept safe, but stopped short of saying explicitly that even uninsured deposits will be backstopped by federal officials.

"What I'm saying is you've seen that we have the tools to protect depositors when there is a threat of serious harm to the economy or to the financial system, and we're prepared to use those tools. I think depositors should assume that their deposits are safe," he said.

— Jesse Pound

Fed Chairman Jerome Powell said the central bank will conduct more rate hikes if it needs to in order to fight inflation.

"If we need to raise rates higher, we will," Powell said in the press conference. "I think for now, though ...we see the likelihood of credit tightening. We know that that can have an effect on the macro economy."

The chairman said the Fed will also watch inflation and the labor market closely.

"Of course, we will eventually get to tight enough policy to bring inflation down to 2%," Powell said.

— Yun Li

The market is getting it wrong if it expects rate cuts later this year, said Federal Reserve Chair Jerome Powell.

He highlighted the fact that the central bank's summary of economic projections published Wednesday anticipates slow growth, a gradual decline in inflation and the rebalancing of both supply and demand within the labor market.

"In that most likely case, if that happens, participants don't see rate cuts this year," he said.

Powell added that what lies ahead for the economy may be "uncertain," but rate cuts are not currently in the central bank's "baseline expectation."

— Samantha Subin

Correction: Fed Chair Powell indicated that rate cuts are currently not in the central bank's "baseline expectation."

Federal Reserve Chair Jerome Powell said that management at Silicon Valley Bank "failed badly," while exposing customers to "significant liquidity risk and interest rate risk."

He added that stronger supervision and regulation is needed to prevent another string of bank collapses and deposit crisis.

"My only interest is that we identify what went wrong here," Powell said.

— Brian Evans

At his press conference on Wednesday afternoon, Fed Chair Jerome Powell spoke about Silicon Valley Bank's failure.

-Darla Mercado

Fed Chairman Jerome Powell said the rate-setting committee considered a pause in rate hikes in light of the banking crisis.

"We did consider that in the days running up to the meeting," Powell said in the press conference when asked about a pause.

Powell said the reason for the very strong consensus for a rate hike resulted from the intermediate data on inflation and the labor market that came in stronger than expected before the recent events.

"We are committed to restoring price stability and all of the evidence says that the public has confidence that we will do so that will bring inflation down to 2% over time. It is important that we sustain that confidence with our actions, as well as our words," Powell said.

— Yun Li

Federal Reserve Chair Jerome Powell noted that tighter credit conditions are likely ahead following turmoil in the regional banking sector.

"We believe, however, that events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes," he said.

"It is too soon to determine the extent of these effects, and therefore too soon to tell it how monetary policy should respond," Powell added. "As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate."

The Fed will closely monitor incoming data and assess the actual and expected effects on tighter credit conditions on economic activity, the labor market and inflation in order to inform its policy decisions, Powell added. He said the Fed is "strongly committed" to returning inflation to its 2% objective.

— Pia Singh

The banking system is resilient and deposit flows are back on track, Federal Reserve Chair Jerome Powell said.

"Deposit flows in the banking system have stabilized over the last week," he said.

Powell said the powerful actions taken by the Fed, Treasury Department and FDIC demonstrate that depositors' savings and the banking system are safe.

The central bank is now undertaking a thorough internal review to see where it can strengthen supervision and regulation.

— Michelle Fox

Fed Chairman Jerome Powell warned that the central bank still has some distance to cover as it tries to bring down inflation to its longer-run goal.

"The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy," the central bank leader said at his post-meeting news conference.

He noted some progress and also said the Fed will be assessing data and the impact of its rate hikes in deciding how to proceed with policy.

"Inflation has moderated somewhat since the middle of last year, but the strength of these recent readings indicates that inflation pressures continue to run high," Powell said.

—Jeff Cox

Fed Chair Jerome Powell acknowledged that the issues in the banking system in recent weeks will create tighter credit conditions.

"We believe however that events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and business, which would in turn result affect economic outcomes. It is too soon to determine the extent of these effects, and therefore too soon to determine how monetary policy should respond," Powell said.

He later compared the banking issues to additional rate hikes.

— Jesse Pound

Federal Reserve Chair Jerome Powell said the central bank will use all its tools to safeguard the banking system.

"Our banking system is sound and resilient, with strong capital and liquidity. We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound," Powell said.

"In addition, we are committed to learning the lessons from this episode, and to work to prevent episodes from events like this from happening again," he added.

— Sarah Min

The Federal Reserve's decision to increase interest rates by a quarter percentage point shows it is having a "problem pivoting," according to David Kelly, chief global strategist at JPMorgan Asset Management.

"They really should have pivoted to a much more neutral stance," Kelly said on CNBC's "Power Lunch" shortly after the rate increase was announced.

He believes the central bank has been too aggressive in raising rates and is "clinging onto hawkishness." In its post-meeting statement, the Fed could have acknowledged further progress against inflation, he said.

"Unless they say they are making progress against inflation, then it is getting harder and harder for them to pivot without sounding like they are scared of the banking system," Kelly said.

— Michelle Fox

The FOMC's statement saw significant changes this month, as the central bank monitors stress in parts of the U.S. banking system.

The notable changes include a shift away from "ongoing increases" to the policy rate to "some additional firming," as well as saying that the "U.S. banking system is sound and resilient."

Check out the full changes to the statement here.

— Jesse Pound

The rate-setting Federal Open Market Committee assured the public of the banking system's strength in a statement.

"The U.S. banking system is sound and resilient," the FOMC said. "Recent developments are likely to result in tighter conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks."

Read more about the Fed's decision here.

In its projections, the Federal Reserve signaled that there is just one more rate increase coming this year.

"The Committee will closely monitor incoming information and assess the implications for monetary policy," the FOMC's post-meeting statement said.

The central bank boosted rates by a quarter percentage point on Wednesday, in a move that brings its target range to 4.75% to 5%.

Read more here.

-Darla Mercado, Jeff Cox

The Federal Reserve increased the benchmark overnight lending rate by 25 basis points, or 0.25 percentage point, meeting the expectations of market participants. The move raises the Fed's target range to 4.75%-5%, which is the highest level since 2007.

-Darla Mercado

Here's where markets stand before the Federal Reserve's rate decision.

The Dow Jones Industrial Average slipped 0.2% around 1:46 p.m. ET, while the S&P 500 inched downward by 0.1%. The Nasdaq Composite was slightly positive, with a 0.1% gain.

Treasury yields fell ahead of the central bank's decision, with the two-year yield at 4.14%, down three basis points. The yield on the 10-year note was 3.547%, declining roughly five basis points.

Oil prices ticked higher. West Texas Intermediate futures and Brent gained roughly 1%.

-Darla Mercado

The Federal Reserve's decision will arrive at a tense moment for markets as the central bank juggles its efforts to quash inflation while stabilizing the embattled banking sector.

Markets are anticipating the Federal Open Market Committee will push rates higher by 0.25 percentage point on Wednesday afternoon. This would bring the benchmark funds rate to a range of 4.75% to 5%, the highest level since 2007.

Policymakers will also issue their forecasts for the economy and the terminal rate. The FOMC members will roll out their individual projections for interest rates, known as the dot plot.

The wildcard in this rate decision is the recent distress in the global banking sector: There's the question of whether the Fed will move forward with a rate hike in the wake of recent bank failures. Alternatively, there have also been instances in the past in which the central bank either paused or trimmed rates only to resume hiking afterward, according to Citi economist Andrew Hollenhorst.

Read more here.

-Darla Mercado, Jeff Cox

Economists said Federal Reserve Chair Jerome Powell will have a tricky job this afternoon: balancing the continued need to bat down inflation with rising concerns of instability in banks.

"The Fed still has work to do, and their actions and communications are going to come under increasing scrutiny given the events of the past few days," said Vanguard senior economist Andrew Patterson. "They need to be careful in balancing the risks of price and financial stability."

Joseph Davis, the firm's global chief economist, said the central bank has to walk a "delicate line."

And whatever decision the Fed makes, economists say, will result in criticism.

Luke Bartholomew, senior economist at abrdn, said he agrees with the consensus prediction that the central bank will approve an interest rate hike of a quarter of a percentage point. But he said that decision marks a shift from before the banking crisis, when a half percentage point hike was considered a more likely possibility.

"The Fed faces a very tough decision this week," Bartholomew said. "Just a couple of weeks ago, Chair Powell seemed to be preparing the ground for the Fed to raise rates by 50bps in March in response to concerns about the inflation outlook. However, the rolling bank sector crisis now means many investors are expecting the Fed to keep policy on hold this week to avoid inflicting any more stress on markets."

— Alex Harring