Good morning investors.

If you didn’t watch Jerome Powell’s press conference yesterday, do not fret — we’ve got everything you want to know in today’s newsletter.

One takeaway that will make you sound smarter at the water cooler today: The Fed wants what it can’t have.

The Fed has no idea when it can get what it wants

On Wednesday, the Federal Reserve conceded inflation wasn’t cooling as expected, and policymakers left interest rates unchanged at their two-decade high.

Jerome Powell acknowledged the recent string of hot data and said central bankers are “prepared to maintain the current target range for the federal funds rate for as long as appropriate.”

However, he maintained it’s “unlikely” the next policy move is a hike.

That comment led to a momentary stock rally that ended up fizzling.

Based on the committee’s statement and Powell’s press conference, it’s clear the Fed aspires to cut interest rates at some point. 

Yet given inflation’s “lack of further progress” to the Fed’s 2% target, that isn’t viable right now. 

The Fed wants what it can’t have. 

And as Powell expressed, the economic data probably won’t green-light rate cuts for the foreseeable future.

The higher-for-longer regime marches on. 

In any case, Powell & Co’s messaging was also notable because it seemed to establish that sticky inflation, in their view, is a greater threat to the economy than high interest rates. 

Part of that sentiment might be policymakers looking over their shoulders at history. 

The central bank doesn’t want any repeats of the 1970s, when the Fed thought it had inflation beat before it came roaring back with gusto.

Those concerns are indeed valid. But shrugging off the potential damage of high rates has its pitfalls, too.

Whether its delinquencies or corporate failures or real estate, at some point something somewhere is sure to break. 

So with the Fed’s prolonging its wait-and-see strategy, the outlook remains cloudy. 

The vaunted soft-landing scenario that forecasters had talked up for so long now seems even more distant, which will make it hard for politicians, analysts, and Powell himself to characterize this next chapter.

Powell one more time:

“So far this year, the data have not given us that greater confidence, in particular and as I noted earlier, readings on inflation have come in above expectations. It is likely that gaining such greater confidence will take longer than previously expected.”

*At a glance:

Elsewhere:

• Powell delivered market volatility. On the back of his comments about not expecting rate hikes, stock saw a huge spike and bond yields plunged more than 10 basis points. But none of it lasted very long. (Bloomberg)

• The central bank didn’t cut rates, but it did announce it would reduce the pace of its balance-sheet reduction. Starting June 1, the Fed will slow its monthly Treasury run-off to $25 billion a month. (Barron’s)

• Amazon CEO Andy Jassy broke the law. That’s according to a National Labor Relations Board judge, who said the exec made anti-union remarks in 2022. (CNBC)

Rapid-fire:

• DoorDash stock tumbled after a weak quarter (WSJ)

• Pinterest shares soared 20% for its biggest gain in three years (Sherwood)

• Oil prices are hovering near seven-week lows (Bloomberg)

• Nobel-winning economist Joseph Stiglitz shared a new outlook (Business Insider)

• Meet the two men set to take over Berkshire Hathaway’s $354 billion portfolio (FT)

Last thing:

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