Federal Reserve Chairman Jerome Powell said US central bank may increase interest rates "higher than previously anticipated" and added that it is also prepared to "increase the pace of rate hikes," as part of its attempts to reduce inflation.
In prepared testimony before the United States Senate Committee on Banking, Housing, and Urban Affairs (Senate Banking Committee), Powell said, "The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated."
"If the totality of the data were to indicate that fast tightening is warranted, we would be prepared to increase the pace of rate hikes," news agency Reuters quoted Powell as saying.
“Although inflation has been moderating in recent months, the process of getting inflation back down to 2 per cent has a long way to go and is likely to be bumpy,” he observed.
The benchmark overnight interest rate of Fed is currently in the range of 4.50 per cent to 4.75 per cent.
The remarks by Powell triggered an immediate impact on bonds, the dollar and stocks.
The Dow Jones Industrial Average fell 179.49 points or 0.54 per cent, the S&P 500 was down by 24.89 points or 0.61 per cent, and Nasdaq Composite declined 45.46 points, or 0.39 per cent, following the remarks.
Bond yields moved higher and the dollar extended gains following the remarks by the Fed chair.
