Jerome Powell – the Chairman of the U.S. Federal Reserve testified before Congress on the battle against inflation and state of the economy on Wednesday. Here’s everything he told the Senate Banking Committee.
A brief recap of Powell’s remarks
It’s not at all too late for us to bring inflation back down
Likelihood of a recession is not particularly elevated
We want to get the housing market back on a more sustainable path
Composition of U.S. inflation is different from other major economies
Ukraine is not the primary driver of inflation in the United States
Low confidence readings are directly related to high inflation
We want wages to be moving up at the highest sustainable rate
The benchmark S&P 500 index closed roughly flat on Wednesday.
Fed is strongly committed to address inflation
Power is testifying to the Congress a week after he raised interest rates by 75 basis points (biggest hike since 1994) to tame inflation. He reiterated to Congress on Wednesday that the Fed is “strongly committed” to addressing higher prices.
The market has been reading our reaction function reasonably well. And what you’ll see is continued expeditious progress toward higher rates. The Committee wrote down last week that rates would be between 3.0% and 3.5% by the end of 2022.
Last week, Chairman Jay Powell also said that another 75 bps increase in the next policy meeting remains on the cards.
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