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Powell's surprise "hawk" speech sent expectations for a 50 basis point hike in March above 50 percent

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Mr Powell said the Fed was likely to continue tightening monetary policy because of persistent inflation

原文标题：《鲍威尔讲话意外「放鹰」，3 月加息 50 个基点的预期升破 50% 》

Originally written by Mary Liu, Biitui . BitpushNews

On the morning of March 7, local time, the chairman of the US Central Bank Jerome Powell delivered his semi-annual monetary policy testimony to the Senate. Powell said the Fed is likely to continue tightening monetary policy because of persistent inflation, and possibly more quickly than previously thought, an unexpectedly aggressive stance following a slower pace of rate hikes last month.

鲍威尔讲话意外「放鹰」，3 月加息 50 个基点的预期升破 50%

"The latest economic data have been stronger than expected, suggesting that the eventual level of interest rates may be higher than previously thought," Mr Powell told the Senate Banking committee. "We would be prepared to increase the pace of rate increases if the headline data indicated that faster tightening was warranted."

The comments suggest the Fed could raise rates by more than last month's 25 basis points at its next policy meeting on March 21-22.

After Powell's comments, traders' bets on a 50 basis point Fed rate hike in March rose to 51.3 percent, according to CME Group's FedWatch interest rate forecasting tool. , up sharply from 31.4 percent a day earlier and 9.2 percent a month earlier. The Fed had been widely expected to maintain the quarter-point rate hike it approved on February 1, slowing aggressive rate hikes in 2022.

鲍威尔讲话意外「放鹰」，3 月加息 50 个基点的预期升破 50%

In addition, traders now expect the peak -- the final value of the benchmark rate -- to reach 5.5% by the summer. -5.75% range. In their December estimate, Fed officials set the final rate at 5.1%. .

Key recession indicators are flashing warning signs

Crypto markets and stocks fell sharply after Powell's remarks, and Treasury yields spiked.

Bitcoin It briefly fell about 1.6 percent to 22 after the comments. Under $000. It has since rebounded slightly to 22. 100, the S&P 500 down 1.4 percent. .

The yield on the 2-year Treasury note broke above 5% in intraday trading. , rose to its highest level since 2007. The 2-year yield was more than 100 basis points above the 10-year yield for the first time since September 22, 1981. The last time the 2-year yield was below the 10-year yield was last July. An inverted yield curve has been an accurate signal of an impending recession for half a century, according to CNBC analysts.

鲍威尔讲话意外「放鹰」，3 月加息 50 个基点的预期升破 50%

The 10-year Treasury typically offers a higher rate of return than short-term notes because investors commit their money for a longer period of time. Treasury bonds with shorter maturities, such as two - or three-year notes, typically offer lower yields because risk is easier to predict than over the long term. .

But when the return on a 10-year Treasury note is lower than that on a two-year note, it is a sign that investors are pessimistic about the outlook and unwilling to put money to work.

Economists have long viewed an inverted yield curve as an accurate signal of an impending recession. According to research by the San Francisco Fed, an inverted yield curve has preceded every US recession since 1955.

Powell Says Fed 'still far from' inflation target

The Fed began aggressively raising the federal funds rate a year ago, and the current range is 4.5% to 4.75%. . Even so, the economy has shown remarkable resilience. Payrolls grew by more than 1 million in the three months through January, and the Fed's preferred inflation gauge, the personal consumption expenditures index, was up in the 12 months through January. Rose by 5.4%, with consumption and inflation data pointing to persistent price pressures.

Powell also stressed that the central bank still has some way to go before it can declare victory over inflation.

In Senate testimony, he noted that the labor market remained "extremely tight" even as the Fed raised interest rates and tried to cool economic growth. "We are far from our price stability mandate, and the actual economic data have exceeded most estimates of maximum employment," he said.

Senate Democrats are wary of accelerating rate hikes, with senior Democratic Senator Elizabeth Warren telling the conference if unemployment rises to the Fed's projected 4.6 percent by year's end. Two million jobs will be lost. "How would you explain your view that unemployment is needed?" she asked Powell.

Mr Powell argued that all Americans were suffering under the weight of rising prices. Inflation was very high and hurt the American people badly.

He responded: "Would working people be better off if we walked away from this job and kept inflation at 5-6%?"

The U.S. added 517,000 nonfarm jobs in January 2023, with an unemployment rate of 3.4%. , the lowest level in 54 years. The Labor Department is scheduled to release February hiring on Friday and its February inflation report next week, which will provide guidance on new monetary policy. "We do have two or three very important data releases to analyse ahead of the FOMC [Federal Open Market Committee] meeting that are important for us to assess these relatively new data," Mr Powell said.