Federal Reserve Not Afraid To Raise Rates Further If Higher Inflation Persists, Powell Says

The new date is January 11, 2022.

The stock market turned positive after the Federal Reserve Chairman promised in testimony before the Senate that the central bank wouldn't hesitate to raise interest rates further than projected if inflation continues.

Powell said that they will raise interest rates more.

Brendan Smialowski/ Pool via Associated Press

Powell faced questions at his Senate confirmation hearing about how the central bank will adjust monetary policy to combat inflation.

The economy is expanding at a fast pace and the labor market is strong, but challenges like higher inflation and a mismatch between supply and demand still remain, according to the Fed chair.
The Fed will not be afraid to raise interest rates if inflation remains high, even though Powell predicted that supply chain issues would be normalized later this year.

The Federal Reserve said at its policy meeting last month that there would be three interest rate hikes this year.

After Powell spoke, the three indexes all fell, but all of them recovered their losses.

The S&P 500 and the Nasdaq were both positive by midday, with the S&P 500 rising 0.5% and the Nasdaq climbing 1.3%.

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Powell said that they will raise interest rates more. We will use our tools to get inflation back.

The key background is.

The stocks have had a rough start to the year. The benchmark S&P 500 index is down more than 3% so far this year after rising 27% in 2021. The tech-laden Nasdaq is down over six percent, while the blue chip index has fallen 2%.
Contra:

The Fed's response to the crisis could become the new normal for monetary policy, according to Senator Pat Toomey, who supports Powell's renomination. I worry that the Fed's new framework has contributed to the Fed being behind the curve as we see inflation running at a 39-year high.

What to watch for.

Many of the big banks will report financial results Friday, as corporate earnings season kicks off.
The Fed minutes show the central bank could remove moreStimulus.

Top-performing fund managers have 10 great stock picks for 2022.