Fed Chair Powell

Federal Reserve Chairman Powell

“I want to take this opportunity to say directly to the American people that inflation is too high.” Fed Chairman Powell said bluntly at a press conference.

In the early morning of May 5th, Beijing time, the Federal Reserve Open Market Committee (FOMC) announced that it would raise the target range of the federal funds rate to a range of 0.75%-1.00%, in line with market expectations .

Powell said that for a sustained strong labor market environment that benefits everyone, inflation must be lowered. Today’s U.S. labor market is extremely tight and inflation is too high. Against this backdrop, the Fed raised its policy rate by 0.5 percentage points and expects further increases would be appropriate.

Powell also emphasized that a single 50 basis point rate hike in the next two or three meetings is generally supported by the committee, assuming economic and financial conditions are in line with expectations possible options. However, the Fed will still respond with corresponding policy tools based on real-time data.

Powell added in response to questions that the FOMC is not actively considering whether to raise interest rates by 75 basis points in a single time.

“It’s very difficult to try to give forward guidance 60 to 90 days in advance. There’s still a lot going on in economies around the world. We give ourselves leeway so that Make a decision based on the Fed’s goals after seeing the data,” Powell said.

Regarding aggressive interest rate hikes, whether the Fed will worry about triggering a recession, Powell bluntly said that “the U.S. economy is developing quite well.”

Powell said: “We expect steady growth this year. We think household spending and business investment are pretty strong, even in the first quarter, which is Relatively slow in other respects. There are many job opportunities in the labor market. Because wages and interest rates are rising, which is not seen in a long time. Now is a person who wants to change jobs or seek a raise in an existing job Good timing. So it’s a strong economy and there’s no sign of it coming closeor vulnerable to recession. “

Powell believes the Fed will recover from the pandemic this year and the economy will grow very strongly, with GDP growth expected to exceed 5% this year. And now is a great opportunity to Restoring price stability to avoid a recession in the U.S. economy.

Powell soothed market sentiment by ruling out a single 75 basis point rate hike. U.S. stocks ended sharply higher on the day, saying The index closed up 932.27 points, or 2.81%, to 34061.06 points; the Nasdaq soared 401.10 points, or 3.19%, to 12964.86 points; the S&P 500 rose 124.69 points, or 2.99%, to 4300.17 points.