© Reuters. Federal Reserve Chairman Jerome H. Powell testifies before a House Financial Services hearing on the “Federal Reserve’s Semi-Annual Monetary Policy Report” on Capitol Hill in Washington, United States, March 8, 2023 REUTERS/Kevin Lamarque
NEW YORK (Reuters) – Federal Reserve Chairman Jerome Powell on Wednesday reiterated his message of higher and potentially faster interest rate hikes, but stressed that the debate was still ongoing and that a decision would depend on data yet to be released ahead of the U.S. central bank’s policy meeting. in two weeks.
“If – and I emphasize that no decision has been made on this – but if the full data were to indicate that faster tightening is warranted, we would be prepared to accelerate the pace of rate hikes,” he said. Powell told US officials. Financial Services Committee in his testimony which added a caveat to the otherwise identical message he delivered to a Senate committee on Tuesday.
MARKET REACTION:
STOCKS: rose 8.72 points, or 0.22%, to 3,995.09 BONDS: The 10-year U.S. Treasury last rose on September 32 with a yield of 3.9481%, versus 3.975% late TuesdayFOREX: The Euro was down 0.01% and also stable
COMMENTS:
JACK ABLIN, CHIEF INVESTMENT OFFICER, CRESSET CAPITAL, CHICAGO
“Now investors are worried that the Fed is overdoing it, over tightening. We have the biggest reversal in over 40 years and it’s called a recession every time for the past seven times. If you look at the small business sentiment you’re looking at consumers it’s clear we’re headed down economic growth is pretty weak and with it likely inflation and my frustration is the president is riding his bike and looking at his pedals and not over the handles a long story between rate hikes and subsequent declines in inflation, economic growth, earnings and everything else and unfortunately it takes 18 months to three years. rises 50 basis points on a February figure, it is myopic at best and investors share my concerns.
“If you look at the history between the peak in the federal funds rate and the subsequent peak in the unemployment rate, you have to wait about three years. Unfortunately, the job market that we are reacting to right now is really a reaction to the crisis of last march the federal funds rate is not that of march.
“It’s like you’re in the shower and turn on the hot water but it takes a while to go through the nozzle, if you turn on the hot water and it’s still cold and you keep going Turning that dial will get you burned and I’m afraid the Fed will burn us.”
VICTORIA SCHOLAR, INVESTMENT MANAGER, INTERACTIVE INVESTOR, LONDON
“We are seeing a bit of a lackluster session. Maybe there was a knee-jerk reaction and the markets are trying to recoup some of the losses (from Tuesday). And maybe the selling was a bit overdone. “
“Friday’s payrolls report is likely to be one of the most important nonfarm payrolls reports we’ve had in some time, simply because of the implications for Fed policy in March.
“I’ll be paying particular attention to the US jobs report; if the report is very strong and wage growth is also strong, then a 50 basis point move would be more likely. So it’s almost the case where good economic news is bad news for the market.”
“If the economy looks to be still robust with labor market tightness, then the Fed will take that as a sign to take more aggressive action as if the economy is somehow strong enough for the TO DO.”
PETER TUZ, CHAIRMAN, CHASE INVESTMENT COUNSEL, CHARLOTTESVILLE, VIRGINIA
“(Powell was) pretty adamant he dashed hopes that we were close to the turning point where the Fed was about to suspend rates.”
“‘Higher for longer’ is the mantra that will continue, at least until the end of the week until the data (from the February jobs report), which could pour gas or oil. water on it.”