The US economy will need tight monetary policy “for some time” before inflation is under controlwhich will mean slower growth, a weaker job market and “some pain” for households and businesses, Powell said, warning there is no quick cure for soaring prices.
Money market traders saw a 55% chance of a 75 basis point rate hike. in September, compared to 45% before the speech.
The banks, sensitive to interest rates fell 0.2%while the yield on two-year US Treasuries briefly hit its highest level since October 2007 before falling.
High-growth stocks, which tend to do better in a low interest rate environment, also lost. Apple Inc, Amazon.com Inc and Alphabet Inc fell between 0.2% and 2.1%.
Pre-speech data showed US consumer spending barely rose in July, but inflation eased sharply, which could give the Fed room to taper its aggressive rate hikes.
Source: Ambito
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