Powell Speech: Dovish remarks after raising interest rates to 5%

These are the main takeaways from Powell's Q&A sessions at the FOMC press conference:

Too early to say if recent effects change odds of soft landing

"We have the tools to protect depositors when there is the threat to economy, and are prepared to use them."

"Depositors should assume their deposits are safe."

"Takeover of credit suisse seems to have been a positive outcome."

"Unemployment rate estimate for this year is a highly uncertain estimate."

"Recessions tend to be nonlinear so very hard to model."

"We are very focused on getting inflation down."

"Too early to say if recent effects change odds of soft landing."

"There is still a pathway to a soft landing, trying to find it."

Speed of run on SVB suggests need for possible regulatory changes

"If we need to raise rates higher, we will. But right, now we see the likelihood of credit tightening."

"We will be watching that carefully."

"Recent liquidity provision that has increased balance sheet size is not intended to alter stance of monetary policy."

"We don't see ourselves as running reserve shortages."

"We are always prepared to change if that changes, but see no evidence so far."

"Our supervisory team was very much engaged with SVB and escalated issues but we need to try and understand how the bank still failed."

"The speed of the run on SVB suggests need for possible regulatory, supervisory changes."

Rate cuts this year are not our baseline expectation

"Rate cuts this year are not our baseline expectation."

"Policy has to be tight enough to bring down inflation, some of that tightness can come from credit conditions."

"At end of day, we will do enough to bring inflation down to 2%."

"We are well aware of concentrations in commercial real estate."

"I don't think it is comparable to these other banking strains."

"100% certainty there will be outside investigations in SVB, we welcome them."

"I welcome all investigations into this banking failure."

"Fiscal impulse is not driving inflation right now."

The story on disinflation is intact

"The story on disinflation is intact."

"Goods inflation is coming down even if more slowly than we would like."

"We still don't have sign of progress on services ex housing sector."

"That's just something that will have to come through softening of demand, labor conditions."

"We don't yet see progress on core services inflation excluding housing."

"Inflation data, however, did point to stronger inflation."

"We don't know the extent of impact of tighter credit conditions."

"We don't know how significant, or sustained, the effect of this credit tightening will be."

"That said, we think it's quite real."

"That argues for being alert when we think of further rate hikes."

Tightening in credit conditions may mean monetary tightening has less work to do

"Last two weeks will cause a weigh on demand and inflation."

"Need for further hikes will be based on actual and expected effects of credit tightening in particular."

"Focus is on the words 'may' and 'some' as opposed to 'ongoing' increases."

"Our statement was trying to reflect uncertainty in outlook from banking strains."

"It's possible that banking stresses ebb and we have more work to do; opposite may also be true."

"Possible tightening in credit conditions may mean monetary tightening has less work to do."

"We are really focused on potential credit tightening and what that can produce."

"With banks, we are focused on our financial stability tools."

"At the meeting, I heard a significant number of people anticipating tightening credit conditions."

"This was included in their projections."

"Therefore, they were including that foreceast for tighter credit conditions in their forecasts."

"But banking strains are so recent, there is so much uncertainty."

Before banking stress, thought we would have to raise terminal rate

"Banking system is sound and resilient."

"Deposit flows in banking system have stabilized."

"We are undertaking thorough review to see if we need to strengthen regulation."

"Considered banking system issues in days running up to meeting."

"Inter-meeting data on jobs and inflation came in stronger than expected."

"A couple of weeks ago we thought we would have to raise terminal rate, before banking stresses."

"Important to sustain confidence with actions and words."

"In principle, we can think of banking strain as equivalent to a rate hike."

"In assessing need for further hikes, we will particularly be focused on actual, expected effects of credit tightening."

Recent banking events will result in tighter credit conditions

"Inflation has moderated somewhat but strength of recent readings indicate inflation pressures continue to run high."

"Process of getting inflation back down has a long way to go."

"Longer-term inflation expectations remain well anchored."

"We are continuing process of significantly reducing our balance sheet."

"Since last meeting, economic data has come in stronger than expected."

"But we think recent banking events will result in tighter credit conditions."

"That would impact the economy and how we need to respond."

"We will closely monitor incoming data, actual and expected effects of tighter credit conditions."

"We will use that as basis for decisions."

"Path of policy will adjust as appropriate, and we'll make decisions meeting by meeting."

"Reducing inflation is likely to require period of below trend growth and also softer labor conditions."