The Clap
Fed Chair Jerome Powell has brought back 50 basis point hikes to the table after recent figures showed that inflation is picking up.
What
Powell’s comments during the first part of a two-part testimony indicate that:
- The terminal interest rate may be 5.5%-5.75% – higher than the initially anticipated 5.1% in December.
- Larger interest rate hikes may be back on the agenda in an effort to curb stubborn inflation.
Despite this, Powell showed a general sense of optimism about the Fed’s ability to curb inflation without driving the economy into a recession.
So What
Following the news, the markets reacted negatively, with the Dow Jones, Nasdaq, and S&P 500 all declining by more than 1%.
Now What
The decision on interest rates is set to be decided meeting by meeting.
