Why the Fed may raise rates more than expected
The Federal Reserve’s preferred inflation gauge heated up unexpectedly in January, as did consumer spending, showing the continued strength of the US economy — and that rising prices won’t be so easily defeated.
Fed Chair Jerome Powell noted in prepared testimony Tuesday that the central bank will closely monitor economic data — including this Friday's job report. If those reports start to show that the Fed needs to step up its rate hiking pace to slow the economy and inflation, the Fed won't hesitate to act.
The Fed slowed its pace of rate hikes last month to a quarter percentage point after several months of historic three-quarter-point hikes and a half-point hike in the previous meeting.
"We would be prepared to increase the pace of rate hikes," Powell said. "Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time."
Stocks sink after Powell warns of higher rates
From CNN's Krystal Hur
Stocks tumbled after Fed Chair Jerome Powell warned interest rates could remain elevated.
The Dow fell 0.38%. The S&P 500 and Nasdaq Composite slid 0.6% and 0.59%, respectively.
The 2-year Treasury yield(국채수익률) rose to 4.95%, its highest level since 2007.
Gold futures rose 0.71%.
Powell's comments come ahead of a packed week of economic data that could help determine the scale of the central bank's next interest rate hike. The Fed raised rates in February by a quarter point, to a target range at 4.5% to 4.75%.
Powell's hawkish stance suggests the economy and markets could be in for more pain after seeing a rocky 2022 and Wall Street's optimism earlier in the year fizzled out last month.
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https://edition.cnn.com/business/live-news/stock-market-today-fed-jerome-powell-030723/index.html
