Chairman Powell Suggests Continuation of Rate Hikes Despite Volatility

An article in Bloomberg detailed Federal Reserve Board (FRB) Chairman Jerome Powell's first public comments since the equity markets tumbled last week. At his swearing-in speech, Chairman Powell suggested the FRB will remain on track to raise rates despite this volatility, specifically stating, "We are in the process of gradually normalizing both interest rate policy and our balance sheet." He also noted that the FRB will "remain alert to any developing risks to financial stability."

Other Federal Reserve Bank presidents also have supported a continuation of current policy. New York Fed President William Dudley called the market decline "small potatoes," while Cleveland Fed President Loretta Mester stated that "if economic conditions evolve as expected, we'll need to make some further increases in interest rates this year and next year, at a pace similar to last year's."

Adding to these concerns were higher than expected inflation numbers, according to an article in the Wall Street Journal. While markets projected a 1.9 percent increase in the Consumer Price Index for the month of January, the Bureau of Labor Statistics released data showing a rise of 2.1 percent, furthering fears of rate hikes by the FRB. Core prices also rose faster than expected.

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