FILE PHOTO: Federal Reserve Chair Jerome Powell looks on as he testifies before a U.S. House Financial Services Committee hearing on Capitol Hill in Washington, U.S., March 2, 2022. REUTERS/Tom Brenner
March 21, 2022
(Reuters) – The U.S. central bank must move “expeditiously” to bring too-high inflation to heel, Federal Reserve Chair Jerome Powell said on Monday, adding that it could use bigger-than-usual interest rate hikes if needed to do so.
“The labor market is very strong, and inflation is much too high,” Powell said in remarks prepared for delivery to a National Association of Business Economics conference. “There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability.” Story:
STOCKS: The S&P 500 erased a small gain and was down 0.4%
BONDS: The 10-year U.S. Treasury note yield rose to 2.2806%; The yield on 2s was flat at 2.0421%
FOREX: The U.S. dollar index was little changed, off 0.06%
COMMENTS:
OLIVER PURSCHE, SENIOR VICE PRESIDENT, WEALTHSPIRE ADVISORS, NEW YORK
“It’s Powell’s statement that inflation is ‘much too high.’ Three months ago, it was ‘transitory,’ a month a go it was ‘elevated’ and today it’s ‘much too high.’ That’s a hell of a progression. And the market is trying to figure it out, what those statements mean as it pertains to interest rate hikes and whether it increases the likelihood of a couple of 50 basis point hikes down the road.”
“Having said that, I think it’s incredibly important to remember that on Wednesday, Powell stressed the fact that (the Fed) will continue to course adjust based on economic data. So nothing is written in stone.”
JOE SALUZZI, CO-MANAGER OF TRADING, THEMIS TRADING, CHATHAM, NEW JERSEY
“What I’m looking at here is just the market reacting to potential hawkish Fed but I don’t think there’s anything new here so far.”
“This is an oversold market and this quick reaction is based on the headline. Let’s see if they can digest it a little bit more and see what he’s really saying because with the headline the algorithms will move quickly and when one moves they all move and volatility spikes in the market. In other words, you get a quick reaction that is sometimes not warranted and my gut would say that this one is not warranted.”
(Compiled by the Global Finance & Markets Breaking News team)
Source: One America News Network
