Chairman Jerome Powell of the Federal Reserve showed some muscle today during his first interview with Capitol Hill lawmakers since becoming chief of the powerful Fed. He was questioned by New York Representative Carolyn Maloney about his intentions with the interest rate this year, and whether the Federal Reserve was going to get more aggressive or maintain the status quo. Powell did not hesitate to say, in so many words, that the Fed would definitely NOT be sticking to ‘business as usual’ — while not showing his hand yet as to how much of an interest rate spike he was looking at.
Leaks from the Fed meeting last December indicate that the board, Powell’s full approval, are considering at least three sharp interest rate hikes this year. As Powell testified today about his belief that the economy was continue strengthening this year, the Stock Market tickers began a supersonic clicking — indicating the market was on the move. By the end of the day stocks and bonds, which had started at a relatively high level this morning, were anywhere from five to twelve percent lower.
It should be noted that Treasury bonds seemed immune to this roller coaster ride courtesy of Powell’s pronouncements from the Fed. They continued a strong climb, with ten-year yields ending the day at 2.89 percent.