Proactive Investors - After opening flat on Tuesday, US stocks plunged into the red after Fed chair Jerome Powell told lawmakers that interest rate hikes will likely be higher and faster than previously expected.
"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," Powell said in prepared remarks for a hearing before the Senate Banking Committee.
"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."
Inflation remains well above the Fed’s 2% target, with the latest Consumer Price Index report for January showing inflation increased 6.4% year-over-year.
The Fed’s next rate-setting meeting kicks off in two weeks, with a policy announcement set for the afternoon of Wednesday, March 22.
Shortly after Powell’s comments, the Dow Jones Industrial Average had shed 149 points, or 0.5%, at 33,282 points, the S&P 500 was down 27 points, or 0.7%, at 4,021 points, and the Nasdaq Composite had lost 55 points, or 0.5%, at 11,620 points.