The picture on Wall Street is improving as investors evaluate the statements of the President of the Federal Reserve Jerome Powell about inflation and the next moves of the central bank in order to lead prices to a downward trajectory.
Federal Reserve Chairman Jerome Powell today reiterated his commitment to use all the tools at his disposal to fight inflation, stressing that the central bank should raise interest rates further if inflation remains high and leaving open the possibility that the Fed will start shrinking its balance sheet this year.
“If we have to raise interest rates more over time, we will do so,” Powell told the Senate Banking Committee at a hearing to ratify his second term at the helm of the central bank.
The Fed chairman estimated that high inflation would last “until the middle of the year”, adding that if inflation persists at higher levels than expected, the Fed should raise interest rates further.
At the same time, he said that the central bank may decide to allow the shrinking of its balance sheet from the level of 8.8 trillion this year. reached as a result of stimulus measures to halt the crisis.
At the same time, the Fed chairman tried to reassure the markets that the central bank will act cautiously in order not to derail the economic recovery or cause damage to the labor market.
“Now is the time to start moving from the pandemic emergency to a more normal level,” Powell said. “However, this should not have a negative impact on employment,” he added.
Indicators – Statistics
On the board, the industrial Dow Jones recorded marginal changes at 36,069.92 points, while the broader S&P 500 gained 21.18 points or 0.45% at 4,691.47 points. The technology Nasdaq adds 189.85 points or 1.29% to 15,133.41 points.
Of the 30 stocks that make up the Dow Jones industrial average, 17 are moving with a positive sign and 13 with a negative. The biggest gains were made by Salesforce.com with gains of $ 6.17 or 2.69% at $ 235.81, followed by Boeing at $ 214.29 with gains of 2.38% and Apple at $ 174.98. with an increase of 1.62%.
The three stocks with the biggest losses are IBM (-3.47%), Merck (-2.01%) and Travelers (-2%).
Against the backdrop of the inflation rally and estimates for the Fed’s response, the 10-year US yield climbed to its highest level since Monday, January 17, 2020. Since the beginning of the year, the 10-year yield has gained a total of 28 basis points.
Meanwhile, the president of the Fed Bank of Kansas City, Esther George, stated that she is in favor of reducing the Fed balance sheet, which now reaches $ 8.77 trillion. early in the process of normalizing monetary policy.
For his part, Raphael Bostic, chairman of the Federal Reserve Bank of Atlanta, said central bank officials may have to raise interest rates as early as March and begin lowering the Fed balance sheet “relatively soon” after raising interest rates to curb inflation.
Finally, Loretta Mester, head of the Federal Reserve Bank of Cleveland, said today that she sees three increases in US interest rates in 2022, starting in March.
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