In his testimony, Fed Chair Jerome Powell expressed concern over high inflation, noting that it is causing significant hardship and that the Fed is strongly committed to returning inflation to its 2 percent goal. Powell reviewed the current economic situation and outlook, stating that while inflation has moderated somewhat since the middle of last year, it remains well above the Fed's longer-run objective of 2 percent. The labor market remains extremely tight, and the unemployment rate was 3.4 percent in January, its lowest level since 1969.
As a result, the Fed has continued to tighten the stance of monetary policy, raising interest rates by 4-1/2 percentage points over the past year. Powell emphasized that restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run.
In terms of future testimony, Powell's statements suggest that the Fed will continue to take a cautious approach to monetary policy, raising interest rates gradually to avoid derailing economic growth while also working to bring inflation back down to the 2 percent goal. These comments are likely to reinforce expectations of further rate hikes in the future, although the pace of those hikes may not be as slow than previously anticipated.
To me, it is good news as I hope for a longer duration of higher rates for treasury bills so that i can continue to buy them. I also hoped that the bank will align with this expectations and increase their fixed deposit rates.
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