Just four days after his last statement, Federal Reserve Chairman Powell reiterated that the Fed may continue to raise interest rates by 50 basis points in the future, and stressed its determination to continue to raise interest rates to combat high inflation. Once again, he admitted that it may be too late to raise interest rates this year, and that raising interest rates will bring pain, but believes that the US economy can withstand the negative effects of raising interest rates.

Some critics believe that Powell has made some of the most powerful hawkish remarks to date, reiterating that the Fed wants to bring inflation back to the Fed's target level of 2%, and that unless there are clear and convincing signs of falling inflation, otherwise, it won't stop. There are also comments that Powell's remarks are nothing new compared with before.

After Powell began to speak, the three major US stock indexes gave up some of their gains at midday, with the Dow narrowing to less than 200 points, the S & P and the Nasdaq narrowing to about 1 per cent and 1.5 per cent respectively, but both maintained their gains and did not turn down. His gains widened again at the end of his speech, with the Dow up more than 400 points and the S & P and Nasdaq up more than 2%.

During Powell's speech, the yield on the two-year Treasury bond, which is more sensitive to interest rates, rose rapidly to 2.70%. At the end of the speech, it measured 2.71% at one point, refreshing the intraday high since Wednesday, May 11, and the intraday increase expanded to 14 basis points. the increase exceeded the benchmark 10-year Treasury yield by about 9 basis points.

Continue to reiterate that interest rates may be raised by another 50 basis points

Us Eastern time on Tuesday, 17th, Powell attended the Wall Street Journal event, said that focus on reducing U. S. inflation to 2%, hoping that inflation will fall significantly. If the economy meets expectations, it is possible to raise interest rates by 50 basis points.

If the economy behaves as we expect, it will be discussed.

Just earlier this month, the Fed decided to raise interest rates by 50 basis points for the first time in 22 years. 'the next two meetings in June and July may be appropriate for both,' Mr. Powell said at a press conference after the meeting. In an interview last Thursday, Powell repeatedly said that he would bring inflation down to 2%, reiterating the possibility of raising interest rates by 50 basis points in the next two times. In response to what he said after the meeting at the beginning of this month that the Fed was "not actively considering raising interest rates by 75 basis points", Powell responded that he would continue to adjust the pace of rate increases according to the economic situation.

The Fed will continue to act until inflation falls significantly and it may be time to raise interest rates sooner.

On Tuesday, Powell reiterated that US inflation is too high and needs to be reduced, and that curbing high inflation is a challenging task. He believes that both monetary and fiscal policies have provided a lot of stimulus to the US economy. If it were not for the supply chain, the United States would not have such high inflation.

Mr Powell said the Fed would not hesitate to raise interest rates above neutral rates if needed. The neutral rate is not an end point, nor is it an observation point. He said:

We [the Fed] have both the tools and the determination to bring inflation down.

What we need to see is that inflation is falling clearly and convincingly, and we will keep pushing until we see that. If that involves a rise above what is widely believed to be neutral, we will not hesitate to do so.

In an interview on Thursday, Powell regretted that it was "too late to raise interest rates", saying that with hindsight, it might have been better to raise interest rates earlier, and on Tuesday Powell also expressed regret that he could not raise interest rates earlier. The inflation figures actually began to change as early as last October, he said. In hindsight, the Fed might have raised interest rates earlier.

Admit that raising interest rates is painful, but think that the economy can withstand it.

Us retail sales, announced earlier on Tuesday, rose 0.9 per cent in April from a month earlier, the fourth consecutive month of growth. Powell commented when referring to the data

At present, the US economy is strong, and the Federal Reserve believes that the economy is in good shape to resist reducing monetary easing and tightening money.

On Thursday, Powell acknowledged that the process of reducing high inflation would be painful, adding that failure to do so would be the greatest pain. Powell said on Tuesday that the neutral unemployment rate could be closer to 5 per cent than the current 3.6 per cent. He is happy to see a more balanced labor market, saying

It may be painful to restore price stability, but we believe that the labour market can be kept strong. "

Even if unemployment rises "in the short term", the labour market will be strong.

Powell spoke earlier on Tuesday after Brad, chairman of the St. Louis Federal Reserve, a hawkish senior official who had the right to vote at the FOMC meeting of the Fed's monetary policy committee this year, also made comments on Tuesday in step with Powell's rate hike. He supports raising interest rates by 50 basis points in the next few times, saying the Fed now has a "good plan". On the question of whether the Fed should consider more aggressive action in the near future, Mr Brad did not mention the possibility of raising interest rates by 75 basis points as before.

Brad is also bullish on the US economy. He expects the economy to perform "very well" this year and next, saying it is most likely that the US economy will grow above trend, citing a very strong labor market.

Brad believes that the Fed's crackdown on inflation is not too lagging behind the curve, because market prices already reflect future interest rate hikes and do some "water collection" on behalf of the Fed. Powell also referred to market performance on Tuesday, saying that the reaction of financial markets showed that investors had received a signal from the Federal Reserve. He said:

We are happy to pass the expected work, and I don't think the specific number of days is a blessing, but I am glad to see that the financial markets are reacting ahead of time according to our talk about the economy.