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Federal Reserve Board chairman Jerome Powell announces a rate cut at a news conference on Oct. 30, in Washington. Photo: Eric Baradat/AFP via Getty Images

Fed chair Jerome Powell almost rocked the boat during the FOMC's October press conference on Wednesday after announcing a third straight cut to U.S. interest rates.

What happened: Powell initially said it would take a “material reassessment” in the outlook for the Fed to change its view that no further rate cuts were needed. But minutes later he reversed course, saying that holding rates at their current levels would be appropriate as long as the outlook stayed within the Fed’s expectations.

  • That meant the Fed's rate-cutting cycle went from pause to "pause lite," DRW Trading rates strategist Lou Brien tells Axios.
  • Powell's pause lite reversed the decline in U.S. equities and the gains in U.S. Treasuries and the dollar, sending both lower on the day.

The big picture: "Pause lite" is also an apt description for the status of the global economy's two major risks — the U.S-China trade war and Brexit.

  • The tariffs on imported U.S. and Chinese goods that have been wreaking havoc on the manufacturing sector, business sentiment and investment remain in place, but no new tariffs have been added thanks to the "phase one" trade deal.
  • Similarly, Brexit has been pushed back to Jan. 31, leaving in place the uncertainty that has curtailed business activity in Britain and caused economic growth to fall into negative territory last quarter. But the U.K. is still in the EU.

Why it matters to the market: "It can be said that Powell thinks there will not be any reason to ease again in the short or medium term, but that he can be convinced to ease if things don’t go right," Brien added.

  • Powell's view seems to reflect that of the market, as stocks have jumped to new all-time highs this week and Treasury yields have risen to their highest level in months, with the yield curve steepening.
  • And with Powell's assurances that the Fed will be there to cut rates further should things get worse, the market is feeling confident.

Between the lines: Rick Rieder, BlackRock’s CIO of global fixed income, asserts that the Fed's policy rate is now just right and "delivering a very powerful dose of the 'right stuff' from a policy perspective."

  • The Fed has moved to near "the equilibrium rate of interest in an economy that’s facing aging demographic trends, and which benefits from still positive interest rates," Rieder said in a note.
  • "Vitally important is the fact that Fed policy will stop short of persistently cutting rates into the unproductive arena of negative rates."

Go deeper

Updated 5 hours ago - World

U.S. airstrike kills senior al-Qaeda leader in Syria, DOD says

A displacement camp near the village of Qah in Syria's northwestern Idlib province. Photo: Ahmad Al-Atrash/AFP via Getty Images

A U.S. airstrike in northwest Syria on Friday killed senior al-Qaeda leader Abdul Hamid al-Matar, U.S. Central Command said in a statement.

Why it matters: Syria serves as a "safe haven" for the extremist group to plan external operations, according to U.S. Army Maj. John Rigsbee.

Updated 10 hours ago - Politics & Policy

Giuliani associate Lev Parnas convicted of campaign finance crimes

Lev Parnas, a former associate of then-President Donald Trump’s personal lawyer Rudy Giuliani. Photo: Stefani Reynolds/Bloomberg via Getty Images

Florida businessman Lev Parnas was convicted Friday on charges of conspiracy to make foreign contributions to political campaigns, according to multiple outlets.

Why it matters: Prosecutors said Parnas, then an associate of former President Donald Trump's personal lawyer Rudy Giuliani, funneled over $150,000 from a Russian businessman into U.S. campaigns as part of an effort to land licenses in the U.S.'s legal cannabis industry.

Supreme Court agrees to hear challenges to Texas abortion law

Photo: Saul Loeb/AFP via Getty Images

The Supreme Court on Friday agreed to hear two cases challenging Texas' abortion law, which bans the procedure as soon as six weeks into pregnancy, but left the law in place in the meantime.

Why it matters: The court is moving extraordinarily fast on the Texas cases, compressing into just a few days a process that normally takes months. And that schedule means the court will take up Texas' ban a month before it hears another major abortion case — a challenge to Mississippi's own 2018 ban on abortions after 15 weeks.