Fed Chair Powell Sees 25 Basis Points Rate Hike Appropriate
A 25-basis point rate increase at the March 15-16 Federal Open Market Committee meeting would be appropriate given the current levels of inflation and employment, with the possibility of faster rate increases at subsequent meetings if inflation accelerates further, Federal Reserve Chairman Jerome Powell told the Senate Banking Committee on Thursday.
Powell repeated comments that he made before the House Financial Services Committee on Wednesday, noting uncertainty due to the invasion of Ukraine but insisting that inflation needed to be contained.
Asked if he were willing to do what it takes to fight inflation, Powell said that the FOMC will act cautiously and be nimble in reducing policy accommodation but said he would be willing to raise interest rates at a faster pace than 25 basis points in subsequent meetings if inflation does not slow as expected.
Other Federal Reserve officials have called for 100 basis points of tightening by July 1, which would imply at least one 50-basis point increase in one of the next three meetings.
US Stocks, Treasury Yields Dip
Following Powell’s statement, US stocks gave up earlier gains, and government bond yields resumed their decline as Russia’s brutal invasion of Ukraine tightened the noose around its strategic neighbour.
MSCI and FTSE Russell are removing Russian equities from indexes, isolating the country’s stocks from a large segment of the investment-fund industry, Bloomberg reported Thursday. The London Stock Exchange suspended several Russian depositary receipts from trading.
The Dow Jones Industrial Average fell 0.3% to 33,809.87, with the S&P 500 down 0.5% to 4,361.34, and the Nasdaq Composite 1% lower at 13,616.13. The Dow was earlier up by about 200 points. Read: 10-Year US Treasury Yield Rises as Fed Keeps Interest Rates
Consumer discretionary led decliners, while utilities and consumer staples were among the biggest gainers by midday on Thursday.
The US 10-year yield fell 1.9 basis points to 1.85%. West Texas Intermediate crude oil fell by $0.62 to $110.06 a barrel. Gold climbed by $7.8 to $1930 per troy ounce. #Fed Chair Powell Sees 25 Basis Points Rate Hike Appropriate
