S&P 500 and Nasdaq closed higher this Thursday, June 22, after the president of the United States Federal Reserve (Fed) Jerome Powell on his second day of appearances before Congress, he continued to be aggressive and suggested that the Central Bank has not reached the end of its cycle of monetary tightening.
He Nasdaq Composite climbed 128.41 points, or 1%, to 13,630.61 units and the S&P 500 it rose 16.20 points, or 0.4%, to 4,381.89 units. Meanwhile, the Dow Jones Industrial Average closed almost flat 4.81 points, or 0.3%, at 33,946.71 units
The strong rise in the Nasdaq, with a strong technology component, was fueled by Amazon.com and apple inc.
Rate cuts should wait for confidence that inflation will drop to 2%
The test for interest rate cuts fed going forward is confidence that inflation is declining and any reduction will have to wait until central bank officials are confident that inflation is moving toward the 2% target, Fed Chairman Jerome said Thursday. Powell.
“We don’t see that happening anytime soon,” Powell told the Senate Banking Commission on the second day of appearances before Congress. “The test for that is that we have confidence that inflation is moving back towards our 2% target. We want to have confidence.”
Although the latest median projection among monetary policy makers in the fed does show that rates could start to come down next year, Powell said that “it will have to wait for a time when we are sure that inflation is coming down to 2%”.
For her part, the governor of the Fed, Michelle Bowmanaffirmed that “more interest rate hikes” will be necessary to control inflation, which, in his opinion, has been practically stuck at a high level since the end of last year.
Financial markets, however, continue to bet 77% on a 25 basis point rate hike in July and none after, according to the tool. FedWatch of CME.
Investors were taken by surprise that the bank of england apply a 50 basis point rate hike to deal with the stubborn inflationfurther evidence that price growth continues to be a headwind for the global economy.
Source: Ambito
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