The United States may increase pace of interest rate If the strong economic data continues, it could increase it higher Federal Reserve Chairman Jerome Powell said more than previously expected on Tuesday.
January is “unusually warm” across many of The state was most likely behind Strong employment, consumer spending, manufacturing and inflation numbers all indicated a partial reversal of Powell told the Senate Banking Committee that past trends were weakening.
If the college of The data was indicating that faster tightening is warranted, and we would be prepared for an increase pace of rate He said.
Central United States bank he have already Raising standard lending rate eight times early on last yearas she claimed with swell it remains Stubbornly up for a long term goal of 2%.
The Federal Reserve raised interest rates last month a quarter percentage point to between 4.5 and 4.75%, her highest level since global financial calamity.
US stocks fell after Powell’s remarks, with S&P 500 index down around one percent just After noon local time.
He spent a lot of stocks of February in Red as Treasury yields climbed amid fears of more The Fed’s aggressive actions to counter inflation.
the dollar sharply strengthened against The euro and other major currencies after Powell’s remarks.
an opportunity of greater height
Powell’s comments raise the possibility of The Federal Reserve raised interest rates by 50 percent points Then next interview on Writing by economists Krishna Guha and Peter Williams, March 21-22, Evercore ESI in Note to investors.
“We must accept that option It seems somewhat more live than we previously thought,” they said while suggesting A quarter The percentage point rise was still more Possible option.
The markets are now roughly evenly divided on opportunities of And the largest half of a percentage point rise, according to Joe Manimbo, a senior market analyst in convera.
despite its strength movesThe Fed’s preferred inflation measure, personal consumption expenditures, rose slightly to an annual level rate of 5.4% in January.
Basic personal consumption expenditures inflation, which excludes volatile energy and food prices, also It rose to 4.7% annually.
At the same time, work market remains “too tight” with Almost two jobs available for All are unemployed in December, Powell said.
US job creation rose in January, with The bosses creating more from half million new Jobs and unemployment rate to its lowest level since the 1960s.
Solid work market income supports and, in Role, demand.
while pay growth Somewhat slowed down, and analysts believe that this is not enough yet for Fed.
were the policy makers concerned That higher wages can fuel inflation, which complicates battle to restrain in the prices.
to restore price stability, we will need To see lower inflation rates in In that segment, and it’s very likely that there will be some mitigation in exhaustion market Powell said.
debt ceiling pressure
In Tuesday’s session, Powell also faced Questions about the ongoing negotiations between the Biden administration and the Republicans in Congress over to lift debt roof.
“Whatever may happen, Congress really needs to step up debt Powell said, adding to the calls for The two sides to reach an agreement.
United State hit Borrowing ceiling of $31.4 trillion in January, kicking off Frantic talks between Congress and the White House to raise the limit and allow the United States to meet pre-existing spending commitments.
Republicans in Congress has asked for spending cuts in exchange for They are supportive, while the Biden administration has said it wants to separate any talks over Next budget from debt Limit vote.
The nonpartisan Congressional Budget Office warned last The month in which the state risks default on that it debt As early as July if no agreement is reached.
Powell’s appearance comes shortly after Central USA bank Semi-annual report issued on monetary policywhich indicates a tightness of action marketstrong job gains, historically low unemployment and high nominal wages growth.
“the operation of Get inflation back down to two percent He has a long way Powell said:
“We will continue the course until the job is done.”
While some sectors like Housing has plummeted since the Fed’s aggressiveness campaign against Inflation, other areas remain more viscous.
