Some possible consequences:
* End of the "Restrictive" Phase: By labeling the current range as neutral, the Fed signals that its post-hike monetary policy is no longer actively restrictive or braking the economy.
* Discussion goes from "how much more easing is needed?" to "how long will we stay here?"
* Increased Market Uncertainty: Powell's estimate is notably higher than the 3.0% for the neutral rate among FOMC members. This discrepancy suggests increased variance of positions across the board. If the actual neutral rate is lower than 3.50%–3.75%, the Fed may be passively tightening, leading to a slower growth outlook. If the market believes the Fed is now neutral, it may expect rate cuts only if the economy shows clear signs distress, or drop in inflation.
* The bar for future rate cuts is now higher. The Fed may be willing to hold rates at this level for an extended period, which could push up longer-term yields.
In sum: stocks may still rise, but the rates of rising will be more muted, and the probabilities of flat to down moves higher