Federal Reserve chairman Jerome Powell splashed some cold water on the outlook for this year, signaling that the U.S. economic roller coaster would continue.
“We will continue to make our decisions meeting by meeting,” Powell told the Senate Committee on Banking, Housing and Urban Affairs on Tuesday.
“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,” he said. “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.”
Investors did take a step back, pushing the Dow Jones Industrial Average down 1.7 percent, or 574.98 points, to 32,856.46. Among theindustry decliners were Mytheresa, down 4.2 percent to $7.26; Simon Property Group Inc., 2.6 percent to $120.61; Macy’s Inc., 2.5 percent to $21.12; Estée Lauder Cos. Inc., 2.5 percent to $245.46; Farfetch, 2.5 percent to $5.14, and VF Corp., 2.4 percent to $24.26.
Stephen Stanley, chief U.S. economist at the corporate and investment banking firm Santander, described Powell’s speech as “short and to the point” and “significantly more hawkish than I anticipated.” There’s little good news in all of this for retailers, who are coping with higher costs and selling to consumers who have to pay more for food and rent while the Fed tries to cool the economy for the greater good.
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