August 14, 2022

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The US Federal Reserve with a clear message: To control inflation

The US Federal Reserve with a clear message: To control inflation

After some heavy days on Wall Street, all three major indexes closed on Tuesday. This comes after Federal Reserve Chairman Jerome Powell announced at a Senate hearing in the Congress in Washington, DC, the tightening of monetary policy to get rid of accelerating inflation figures.

The statement was well received by the market, which sends out all the leading indicators. This is what it looked like after closing time on Monday:

  • The broad S&P 500 index rose 0.92 percent.
  • The Dow Jones Industrial Average rose 0.51 percent.
  • The Nasdaq Technology Index rose 1.41 percent.

Tension over inflation figures

In November, US inflation rose to 6.8 percent, the highest level since 1982. On Wednesday, inflation figures for December will be released, something that the Fed and markets will follow closely.

It has been speculated whether interest rate hikes and cuts in support purchases from the US Federal Reserve will be reversed based on the higher inflation numbers. This is something that has dampened investors’ optimism on the way into the new year.

Regarding Powell’s candidacy for re-election as Federal Reserve Chairman, he held a hearing with the Senate Finance Committee on Tuesday. In his testimony, Powell stated that the US economy is healthy and needs tighter monetary policy.

– If things develop as expected, we will normalize policy, which means we will end our asset purchases in March, and raise interest rates during the year, according to CNBC.

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Expectations of a rate hike last week contributed to the downturn in the Nasdaq Technology Index. At the same time, the interest rate on US government debt with a maturity of ten years, often referred to as ten years, began to rise. On the Monday before the exchange opened, the 10-year-old was 1.79 percent, up from about 1.3 percent a month earlier.

But despite Powell’s statement in the Senate, the Nasdaq is rebounding significantly on Tuesday.

In its morning report on Tuesday, Handelsbanken cited the good news of Corona as a factor.

– Reports that coronavirus infection in New York may have reached its peak now, about a month after the city’s first omicron case was recorded, may have contributed positively, Handelsbanken reports.

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