Fed poised to accelerate rate hike
The president of the Federal ReserveJerome Powell warned on Tuesday that the Fed is prepared to accelerate the pace of rate hikes if warranted by economic data.
“If the totality of the data indicated that faster tightening was warranted, we would be prepared to accelerate the pace of rate hikes.“Powell told the U.S. Senate in his semiannual appearance.
The latest economic data, he added, “have been. stronger than expected“, which suggests that “the final level of interest rates is likely to be higher than anticipated previously.” Restoring price stability will require maintaining “a restrictive stance of monetary policy for some time.”
Thus, although inflation has been moderating in recent months, Powell explained, the process of getting inflation back down to its 2 percent target “has a long way to go and it is likely to be bumpy.”
“Restore the price stability is essential to lay the foundation for maximum employment and stable prices in the long run. The historical record warns strongly against premature policy easing. We will stay the course until the job is finished,” he concluded.
Consequences on Wall Street
Following Powell’s remarks, Wall Street, which had opened in mixed territory, went into the red. At 10:09 local time (15:09 GMT) the Dow Jones lost 0.59 % or 197.64 points to 33,233.80 units, while the S&P 500 was down 0.88 %, 35.54 points, to 4,012.88 points.
The Nasdaq Market Composite Index, where the major technology companies are listed, lost 0.93%. or 108.81 units, to 11,566.92 integers.