In a speech this morning, Jerome Powell, head of the Federal Reserve, said that the economy had met the test for ‘substantial further progress’.  He went on to say that the Federal Reserve could begin tapering asset purchases this year, but that the Federal Reserve will be patient when it comes to raising interest rates.

Investors liked what the heard.  The S&P 500 index set a new high (4511.98 as of the time of this post, +1% from the prior close ).  The index is up ~20% year-to-date.

The Federal Reserve has made it abundantly clear that they are willing to let inflation run above their 2% target.  Powell discussed ‘deflationary forces’ during the speech.  He noted that wage inflation data doesn’t suggest the US has a long-term inflation problem.