Fed Chairman Jerome Powell told lawmakers on Tuesday that if the data were to indicate that faster tightening is warranted, the central bank ‘would be prepared to increase the pace of rate hikes’
As a result, stock prices tumbled Tuesday, and some bond yields rose as markets anticipated a faster pace of rate hikes.
Powell’s more nuanced remarks Wednesday appeared to be an effort to quell any assumption that the Fed has already decided to raise rates more aggressively based on a recent string of data that pointed to strong economic growth and still-high inflation. The Fed had slowed its pace of increases in February, having boosted its key rate by just a quarter-point, after a half-point increase in December and three-quarters of a point four times before that. Powell’s comments Tuesday appeared to imply that the Fed would return to bigger rates hikes at its next meeting March 21-22.
But under questioning Wednesday from Rep. Patrick McHenry, the Republican chairman of the House Financial Services Committee, Powell said the Fed would closely scrutinize data on hiring, retail sales and inflation that will be released next week before settling on its next move.The U.S.
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