Jerome Powell’s Fed is poised to raise US fed funds rates more aggressively than previously estimated, in order to curb a stubbornly high inflation growth. This is what emerged from the speech that President Jerome Powell made in his speech to the United States Senate yesterday. A speech that triggered powerful sell-offs on Wall Street, so much so that the Dow Jones erased the gains reported since the beginning of 2023 with yesterday’s sell-offs.
In particular, the Dow Jones closed with a plunge of almost 575 points (-1.72%), at 32,856.46 points; the S&P 500 fell by 1.53% by breaching the 4,000-point threshold at 3,986.37. The Nasdaq Composite slipped 1.25% to 11,530.33 points.
“The latest macroeconomic data came in stronger than expected, suggesting that the final level of interest rates is likely to be higher than previously anticipated,” Powell said, adding that the Fed could therefore return to rate hikes. more aggressively than it decided to do at the last meeting, when it announced a 25 basis point monetary tightening.
“Should all the data indicate the need to launch a stronger restrictive policy, we would be ready to increase the pace of rate hikes,” said the head of the Federal Reserve in his hearing in the US Senate.