The panel begins the day in rises after the losses of the day before, something attributable to the purchase of cheaper shares by investors, despite the fact that the war in Ukraine is getting worse and the monetary policy in the US is once again the core theme.
In remarks prepared for his testimony before the House Financial Services Committee, Powell reiterated the Fed’s core narrative that high inflation and an “extremely tight” labor market justify raising rates. “We hope it will be appropriate to raise the target range for the fed funds rate at our meeting this month,” Powell said, adding that the Fed will carry out reductions in its portfolio of government-backed assets this year of about 8.5 percent. billions of dollars.
But in his opening statement, Powell gave no hint as to the speed of the pace of rate hikes. He added that Fed officials still expect inflation to ease later this year, and framed the start and end of his remarks with events unfolding in Ukraine.
The impact of the coronavirus pandemic on the economy appears to be easing, he said, hiring remains strong, and inflation has emerged as the main risk. Inflation “is now well above our long-term target of 2%. Demand is strong, and bottlenecks and supply constraints are limiting how quickly production can respond.”said the head of the Fed.
At the same time, he assured that some of these inflationary pressures are expected to be reduced throughout the year, “we are attentive to the risks of possible additional upward pressures.” Powell also acknowledged the new complexity facing the Fed from events in Europe, which have the potential to both increase price pressures and undermine growth.
“The short-term effects on the US economy of the invasion of Ukraine, the ongoing war, the sanctions, and the events ahead remain highly uncertain,” Powell said. “We will have to be agile in responding to incoming data and evolving outlooks.”
Fed members have indicated in recent days that they may be more cautious about raising benchmark rates for fear of cooling the economy.
Source: Ambito
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