Powell Warns Fed Could Get Aggressive With Rate Hikes Again

Persistent signs of inflation are forcing the Federal Reserve to consider more aggressive rate hikes.

higher and faster

The Fed may not have brought inflation under control yet.

Federal Reserve Chairman Jerome Powell announced today that the central bank is likely to raise federal interest rates more than previously thought and at a faster pace than initially believed, due to signs of inflation. persistent in the US economy.

“Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy,” Powell told the Senate Banking Committee. “The latest economic data has been stronger than expected, suggesting that the final level of interest rates is likely to be higher than previously anticipated. If the totality of the data indicates that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

The Federal Reserve began raising rates in March 2022, raising them from 0% to the 4.50% to 4.75% range in one year. After a series of 75 basis point hikes, the central bank decided to raise rates by just 50 basis points in December and 25 basis points in January, signaling a possible slowdown. Powell’s comments, however, indicate that the Federal Reserve is ready to become potentially aggressive in his approach once again.

The markets only reacted slightly to the news. As of this writing, the DXY is up 0.98%, while the S&P500 is down 0.96%, the Nasdaq is down 0.63%, and the Dow is down 0.90%. BTC and ETH are holding up well, with the top cryptocurrency slid just 0.45% and the top smart contract platform slid 0.49%.

Disclaimer: At the time of writing, the author of this article owned BTC, ETH, and various other crypto assets.