‘Retire’ the Word ‘Transitory’: Powell Inflation Testimony Shakes Stock Market

A Wall Street sign is seen next to surveillance equipment outside the New York Stock Exchange in New York, on Oct. 5, 2021. Mary Altaffer/AP Photo

The SPDR S&P 500 ETF Trust traded lower by 1.8 percent on Tuesday after Federal Reserve chair Jerome Powell changed his tune on the outlook for U.S. inflation.

What Happened

In testimony to the Senate, Powell said he will no longer be using the term “transitory” to describe the environment of elevated U.S. inflation.

“The word transitory has different meanings for different people. To many it carries a sense of short-lived. We tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation,” Powell said. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”