"No Decision" Made on March Meeting
Powell stated on his second day of testimony before the House Financial Services Committee, "We have not made any decision about the March meeting." He repeated his earlier message that the U.S. central bank is likely to increase the interest rates and could move faster if the economic data continues to be positive. However, he added that "no decision" had been made yet.
Potentially Important Data to Affect Decision
Powell mentioned that "we have some potentially important data coming up," referring to the latest reading on U.S. job openings, February's employment report, and consumer price data scheduled for release on March 14. The Fed officials will meet again on March 21-22.
Investors Increase Bets on Interest Rate Hike
Investors increased their bets that the central bank could raise interest rates by 50 basis points during their next meeting instead of continuing with the quarter-point pace from the previous meeting. They also projected that the Fed's policy benchmark would peak at around 5.6% this year, up from 5.5% on Monday.
Higher Interest Rates to Cool U.S. Economy
The Fed began aggressively raising interest rates a year ago, bringing the target on its benchmark rate to a range of 4.5% to 4.75% in February. The central bank's goal is to reduce demand for goods and services and cool price growth. However, the U.S. economy has been resilient to higher rates, with payrolls increasing by over 1 million in the three months through January and recent consumption and inflation data indicating persistent price pressures.
