Federal Reserve Chair Jerome Powell has unveiled his latest buzzword to describe monetary policy, with a "recalibration" of policy at a pivotal moment for the central bank.
At his news conference following Wednesday's open market committee meeting, Powell used variations of the word no fewer than eight times as he sought to explain why the Fed took the unusual step of a half percentage point rate cut absent an obvious economic weakening.
"This recalibration of our policy stance will help maintain the strength of the economy and the labor market, and will continue to enable further progress on inflation as we begin the process of moving forward a more neutral stance," Powell said.
Financial markets weren't quite sure what to make of the chair's messaging in the meeting's immediate aftermath.
However, asset prices soared Thursday as investors took Powell at his word that the unusually outsized move wasn't in response to a substantial slowing of the economy. Rather, it was an opportunity to "recalibrate" Fed policy away from a rigid focus on inflation to a broader effort to make sure a recent weakening of the labor market didn't get out of hand.
The Dow Jones Industrial Average and S&P 500 jumped to new highs in trading Thursday after swinging violently Wednesday.
