In his Semiannual Monetary Policy Report to the Congress, Federal Reserve Chair Jerome Powell warned that the central bank is ready to increase the pace of interest rate hikes if incoming data exceed expectations. And that, "...the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated."
He said that, "despite the slowdown in growth, the labor market remains extremely tight, and inflation well above our longer-run goal of 2 percent".
"The unemployment rate was 3.4 percent in January, its lowest level since 1969. Although inflation has been moderating in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy."
"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," Powell said in his testimony.
US market closed down after the recent bullish trend. Dow Jones closed down 1.75% down 575 points closing at 32856. S&P closed down 1.56% at 3986. Volatility Index ^VIX was up 5% but still in calm range. US Dollar Index ^DXY rose to 105.8. US Dollar now at 3 months high. Yields on the 2-year Treasury climbed above 5% - the highest since 2007.