“We feel like we’re getting close or maybe even there,” Powell said at his post-meeting press conference, referring to the level of rates that will bring down inflation without causing unnecessary damage.

Here are some key takeaways from his remarks and what they mean for the economy.

The Fed is pausing its rate hike campaign. Maybe.

You might have missed it if you’re not a student of central bank-speak, but the post-meeting statement from the Fed’s rate-setting committee had an important message. Unlike in March, when policymakers anticipated that borrowing costs would go up more, now they’re determining whether further hikes are necessary. That means Fed officials believe they might have increased rates enough to bring inflation back down to 2 percent over time.

But they’re not totally sure. “We will be driven by incoming data meeting by meeting, and we will approach that question at the June meeting,” Powell said. Essentially, the Fed will be watching to see the extent to which price spikes continue to ease.

Fed officials don’t plan to cut rates soon.

With the central bank in a holding pattern, investors have been betting that rate cuts won’t be far behind as the economy weakens. But Powell — who remembers that then-Fed Chair Paul Volcker cut rates during a downturn in the early 1980s only to see a resurgence of inflation — has insisted that’s not in the cards yet. That’s because the Fed wants to hold rates at a high enough level to bite into spending and investment until inflation is under control.

“We on the committee have a view that inflation is going to come down not so quickly,” Powell said. “It will take some time. And in that world, if that forecast is broadly right, it would not be appropriate to cut rates.”

Powell doesn’t want to be left holding the bag on a U.S. debt default

The Fed chief repeatedly warned that raising the limit on the U.S. capacity to borrow is the only path forward. “We shouldn’t even be talking about a world in which the U.S. doesn’t pay its bills,” the Fed chief said. “It just shouldn’t be a thing.”

He also said the central bank, which has tools to deal with market turmoil, can do only so much to handle the fallout. Powell, a Republican, was first nominated to the Fed in 2011 after impressing the Obama administration with his efforts to persuade his fellow party members to raise the debt ceiling.

“No one should assume that the Fed can protect the economy and financial system and our reputation from the damage that such an event might inflict,” he said at his press conference.

The banking sector is at center stage

Other than the debt ceiling, the most important development Fed officials are watching is what’s happening with banks. Silicon Valley Bank and Signature Bank, two regional lenders that had a lot of companies and wealthy individuals as customers whose balances far exceeded the $250,000 deposit insurance limit, collapsed after runs in March. And First Republic Bank, which received a near-fatal blow that same month, eventually followed last weekend.

The questions are twofold: Will more banks follow, and how much will banks pull back on lending as they aim to make sure they have plenty of cash to deal with any trouble? Powell said banks are tightening their credit standards and Fed officials are watching what the economic effect will be, which will likely be to slow growth further.

“We will continue to very carefully monitor what’s going on in the banking system,” he said. “And we’ll factor that assessment into our decisions in an important way going forward.”