Lowering rates prematurely could risk reigniting inflation, and doing so too slowly could undermine growth. We're very much balancing those two risks, and that's really the essence of what we're thinking about these days, Powell told the Senate Banking Committee on Tuesday.
Investors are focusing on the upside. Financial services stocks led the way after Powell hinted at a revamped proposal on capital requirements for big banks, potentially benefiting Wall Street.
Powell highlighted a soft-landing scenario in jobs, signaling that labor market conditions are not significantly contributing to inflation. He also mentioned a recent slowdown in inflation after a first-quarter uptick.
Shares of Goldman Sachs hit a new high following Powell's update on revised capital requirements for banks, raising hopes of less stringent rules. This news resulted in a positive market response for bank stocks.
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