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The word that made stocks fall in love with the Fed

Yahoo Finance Live anchors discuss Fed Chair Powell’s remarks at Wednesday’s FOMC meeting and the number of time the central banker mentioned the word "disinflation."

Video transcript

[AUDIO LOGO]

JEROME POWELL: We continue to anticipate that ongoing increases will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.

BRAD SMITH: The Fed chair making it clear tightening isn't over just yet. So let's call it a slightly dovish lean that gave investors a boost yesterday after comments that the disinflationary process has started. According to Yahoo Finance's Myles Udland, disinflation was the word that made stocks fall in love with the Fed chair. He writes in today's "Morning Brief" that, "To take the importance of Powell's comments a step further, disinflation suggests the Fed may well be able to complete its current interest rate hiking cycle and avoid a severe downturn in the economy here."

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And within this "Morning Brief," I think it's, of course, something that we were breaking down earlier with regard to the stock reaction, believing that disinflationary itself was the green light, the signal, to say, OK, you know what, risk, that might be a little bit more appetizing at this point.

JULIE HYMAN: You know, I think also that because the expectations going into the Fed chair's comments-- you know, we talked about this yesterday-- we had this big rally in risk assets in January. The last time we had a rally in risk assets going into a Fed meeting, the Fed chair came out and smacked that down. He did not want to see a loosening in financial conditions. He was directly asked several times if he was disturbed by the rally that we'd seen [INAUDIBLE]. And today, he didn't really seem to react to that. So disinflation definitely part of it and definitely relief versus expectations, I think, Soz.

BRIAN SOZZI: Well, look, we're going to get a lot of Fed members out there on the speaking circuit there in the coming weeks. I'm very curious if they walk back some of those comments that Fed Chief Jerome Powell said yesterday that the market really, really embraced and perhaps was too enthusiastic and too quick to embrace all of it.