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As He's Sworn in as Chairman, Powell Signals Fed Will Go Forward With Rate Hike Despite Market Turmoil
In his prepared remarks during his swearing-in ceremony on Tuesday, new Federal Reserve Chairman Jerome Powell said the Fed will move forward with its plan to gradually increase interest rates, indicating that the agency is not overly concerned about the recent volatility roiling the markets.
Powell’s support of sticking to the Fed’s plan for rate hikes is not unexpected despite the recent selloff in the markets, as his remarks echoed what central bank officials have been saying lately.
Federal Reserve Bank of New York President William Dudley last week called the share shakeout “small potatoes,” while Cleveland Fed President Loretta Mester said on Tuesday that the turmoil hadn’t affected her economic outlook or her support for further interest-rate hikes.
“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” when the Fed raised rates three times, she said in a speech in Dayton, Ohio.
Meanwhile Powell said on Tuesday that although “the challenges we face are always evolving, the Fed’s approach will remain the same.”
Today, the global economy is recovering strongly for the first time in a decade. We are in the process of gradually normalizing both interest rate policy and our balance sheet with a view to extending the recovery and sustaining the pursuit of our objectives. We will also preserve the essential gains in financial regulation while seeking to ensure that our policies are as efficient as possible. We will remain alert to any developing risks to financial stability.
Although the Dow Jones Industrial Average fell as much as 180 points early in the session on Tuesday, it recovered the losses later in the day.
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