Fed's Powell Says Inflation Is 'Much Too High', Signals More Rate Hikes

Federal Reserve Chair Jerome Powell said on Wednesday that inflation is "much too high" and that the central bank is prepared to take "more aggressive action" to bring it down.

In a speech at the National Association for Business Economics, Powell said that the Fed is "strongly committed" to returning inflation to its 2% target. He said that the Fed is likely to raise interest rates by 50 basis points at its next meeting in June and that it will continue to raise rates until inflation comes down.

Powell acknowledged that the Fed's actions to raise interest rates could slow economic growth. However, he said that the Fed is "confident" that it can achieve a soft landing, meaning that the economy will slow down but not go into recession.

Powell's speech came as the US economy is facing a number of challenges, including high inflation, rising interest rates, and a potential recession. The Fed is hoping to raise interest rates enough to slow inflation without causing a recession. However, it is a delicate balancing act and it is unclear whether the Fed will be successful.

Stocks Mixed After Powell's Speech

US stocks were mixed on Wednesday after Powell's speech. The Dow Jones Industrial Average fell 0.2%, the S&P 500 rose 0.1%, and the Nasdaq Composite Index rose 0.3%.

Investors were cautious ahead of Powell's speech and they were looking for more clarity on the Fed's plans to fight inflation. Powell's speech did not provide much new information, but it did reaffirm the Fed's commitment to raising interest rates.

The market is still expecting the Fed to raise interest rates by 50 basis points at its next meeting in June. However, there is some uncertainty about whether the Fed will raise rates by 50 basis points at subsequent meetings.

Oil Prices Fall After Powell's Speech

Oil prices fell on Wednesday after Powell's speech. West Texas Intermediate crude oil fell $1.25 to $111.75 per barrel.

Powell's speech signaled that the Fed is likely to raise interest rates more aggressively in an effort to fight inflation. Higher interest rates are likely to slow economic growth, which could lead to lower demand for oil.

The market is still expecting oil prices to remain elevated in the near term. However, the risk of a recession could weigh on oil prices in the coming months.