Jerome Powell says it's time `to move away from highly stimulative' policy

Alex Wong/Getty Images News

• The Federal Reserve can't address supply-side issues and it's time "to move away from highly stimulative policy accommodation" in order to address inflation, said Chair Jerome Powell during his testimony discussing semiannual monetary policy in the House of Representatives.
• He still expects the central bank policymakers to start raising interests rates in March, according to his prepared statement, but the Ukraine-Russia conflict is making the economic outlook "highly uncertain."
• Developing... check back for updates.
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• Earlier, Jerome Powell says Federal Reserve needs to be nimble as economy evolves
• Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.

Comments

[Whiteshell]

Uhhh, it was "time to move away from highly stimulative policy" 12 months ago. Pouring more and more gasoline on an already raging fire is why we have inflation.

[Robert 7809591]

I love how people including powell want to insist this is not the 1970's. Just last fall various economists were arguing its not the 1970's because the 70's inflation was brought on by money injections by the fed and high oil prices. Last fall oil was about 75 dollars a barrel and many people thought that was near the top of the market so it couldnt be the 1970's. Now its 110 and probably going higher and the fed this month is scheduled to stop buying bonds and injecting money into the economy.

[sirhowitzer]

Looking like early 2005, interest only ARM's, accommodating government subsidy expansion, ninja/liar loans packaged as AAA debt, our EU partners buying MBS, while credit default swaps continue absent regret or recrimination.
Get oil north of $140 and all boxes checked for Mc Mansion's & Escalade's.
Establishment leadership has brought us here before.
Elect the usual suspects and watch the old reliable playbook unfold again, like it was written on a rock in social subtext many can't understand.

[elwalle]

Rich getting richer..........poor getting poorer..........the Jay and Joe show..........say it ain't so

[Maverick 2021]

US Stock market is still way overvalued….

Just look at the S&P500 PE, as inflation continues to rise to 1970s levels…

Powell is using a fly swatter to address Inflation that is everywhere (run away RINO)….!!

Hang On

[Robert 7809591]

Boy some of the politicians seem half dead and need to be in a nursing home. Its clear many dont even understand the questions their staffs prepared for them. Its not hard to understand. When you give people checks to spend, pay them to stay at home, pump trillions of dollars into the economy much of which ends up in the stock market, bitcoin, and commodities you get inflation. Powell seemed a little irritated by one congressman reminding him how powell insisted a year ago the fed was not monetizing the debt. Doubling the balance sheet is in no way monetizing the debt?? How did the national debt go from about 20 trillion two years ago to now 30 trillion?? I just see a lot of people in the deep end of the pool now who think they know how to swim in this new reality of higher interest rates and balance sheet reduction and they really dont.

[King4Coins]

@Robert 7809591 0.25 base points is not higher interest rates, furthermore, like I said months ago please check my comments, the fed is stuck. They can not go eight times, it is probably more likely 2-3 times at 0.25. For inflation to go away you need the interest rate to go higher than the inflation rate. The problem is that if you rise rates above real inflation which is probably closer to 10-12% then you bankrupt America. I have been on record for two years now on telling people to buy commodities and crypto. Now the only thing outperforming is commodities and crypto. I feel really sorry for those of you who brought value in hopes of a rotation. The rotation will be a selling of value and getting out of the market completely which will leave your value stocks in the tank.

[Robert 7809591]

@King4Coins A quarter point is a drop in the bucket as you imply. What I want to see is not how many rate hikes there are but how fast the fed reduces its balance sheet since reductions are defacto rate hikes. When the fed tried rate hikes AND reductions in 2018 the markets back was finally broken and the fed reversed course. I see way too many people on my facebook stock groups (mostly people under the age of 40) who just assume if the market goes down, the fed will come to the rescue and markets will go to new all time highs. They have no concept of "dont fight the fed" when the fed is tightening. This will take months to play out. You have people like Cathy Wood of ARKK still insisting the major risk is deflation not inflation while her fund (that depends on zero rates) has been cut in half. Just like my generation in 2001-02 I think there are lots of people who know only zero rates, low inflation, stocks go up and if they go down the fed makes them go back up. These people have to learn the same lesson my generation did, that markets can become very overvalued and the fed is not always your friend.

[Robert 7809591]

@King4Coins "The problem is that if you rise rates above real inflation which is probably closer to 10-12% then you bankrupt America." Then you never really solve inflation and end up devaluing your currency. Many congressmen and women are worried the fed will put the U.S in a recession to bring down prices. When did the U.S ever get lower prices without a recession?? We can have a recession and take our lumps or see prices continue to go up. Its that simple. I think this is just the first leg down in a down market and most people are still whistling through the graveyard of half the stocks in the S&P in a bear market and something like 75 percent of the Nasdaq in a bear market.

[DucatiSteve]

The Fed will keep pumping money into the market so that those of us wealthy enough to own stocks will still have great income. It's a shame that the hardworking taxpayers that are supporting it don't benefit from the $120 Billion per month pumped into the market. Gotta keep us wealthy happy. That inflation really doesn't affect since it is nothing compared to the intake. And he’s only going to increase the rate .25 Yeha! Powell thank you so much for not hurting our market. Certainly not fair for most American but, We love it!

[StandingWatch]

@DucatiSteve This is the truth.

Meanwhile the politicians on both sides keep folks fighting vaxx v. unvaxx, Rep v. Demo, black v. white while the whole time the haves over the have nots are the winners.

But keep fighting each other folks.

[Robert 7809591]

@DucatiSteve I understand that is probably sarcasm but according to congressman Perlmutter, inflation is only 5 percent and the poor got a ten percent raise so they are according to him way ahead.

[Agbug]

@StandingWatch , Culture wars get eyeballs and stir up emotions for voters. The average American voter has little comprehension of what FED policy actually does and it would take more than a tweet or Instagram to explain. I tried to explain to my Millennial Son why I'm not phased by so much of it. It's not new. I grew up watching Good Times, The Jefferson's, All in the Family...

Even Michael Bloomberg came out with advise to the Democrats to lay off the culture wars last week.

[SteveBud]

Where were his balls during the last administration?

[Stefan Redlich]

bla bla, 0.25%, does nothing... meanwhile: price of coal: +32% TODAY alone!

[Jason Alberty]

@Stefan Redlich Agreed, but I do think 50-75bps will show the cracks. The Real Estate owners are not making money right now and haven't been for the last year. The only money being "made" comes via cash out refi's via appraisers that are using the lowest cap rates in history to keep getting higher and higher appraisals with no change in underlying fundamentals other than aging buildings. Cap Rates manipulation has completely replaced "stated income" and "adjustable rates". REITS are also disguising expenses as capital expenses to make investors feel safer. Nothing has changed in regard to the fraud except for the strategy. We sold all our real estate assets about a year ago because of this.

[Robert 7809591]

@Stefan Redlich Coal?? That is NOT very ESG of you LOL. Nice that you Germans finally realized shutting down nuclear and fossil fuels to get gas from Putin wasnt such a good idea. My father is German and always said how smart the Germans were but this doesnt look very smart. Nice of you to send the Ukrainians Javelins but what good will they do now if they cant get to the front line troops.

[Robert 7809591]

He just told a congressman that the fed plans to get its balance sheet "back where it was before in relation to the economy". The last time the fed tried to do that the markets dropped 20 percent in a month and then the fed reversed. I think a lot of people think that will just happen again. Unfortunately inflation back then was about 2.5 percent not seven percent. I still see way too many people not used to this environment assuming the fed will just keep providing free liquor and food to the market party if supplies get low.

[California100]

Inflation has been a three alarm fire (worst in 40 years), and Powell is finally sending out one firetruck in March.

[billrla]

Muzzling Powell would improve his message.

[elwalle]

Bostic proclaimed yesterday that it would be difficult to keep inflation under 3 %..............you can't make this stuff up

[rando_on_the_internet]

It was time to move away from highly stimulative policy last June.

[2MuchDebt]

Ya think!? That time was years ago, J-Pow. Always hedging his bets (Ukraine-Russia conflict). Nothing changes with these guys. Anything to try to keep interest rates at or near zero.

[H0ney_badger]

@2MuchDebt asleep at the wheel....zzzzzZzzzzz

[Dmaddron]

Nordstrom, Nvda, Square, Enphase, Target Plenty of good ideas without worrying about the Fed

[financeminister]

But I thought inflation was going to be tr tr tra traaa TRANSITORY!!!!!

[user 11202791]

no need for rate hikes, high oil prices will bring recession by itself

[Wez]

"but the Ukraine-Russia conflict is making the economic outlook "highly uncertain.""

...and just like that, he's given himself an out to keep inflating asset prices and pushing inflation higher.

[Winnertakesall]

Growth/Momentum traders are detached from reality... you're meme stocks are never coming back. You might as well sell or save them for tax harvesting.