Federal Reserve Chairman Jerome Powell said Thursday that he would "hesitate" to raise interest rates again, adding during a speech to an event in Washington that the central bank is not yet confident that financial conditions are restrictive enough to tame inflation.
In prepared remarks for a policy discussion at the Jacques Polak Annual Research Conference, Powell said rate decisions will be taken on a meeting-by-meeting basis. But he stressed that the Fed would be "attentive" to price given that there is a "long way to go" to return inflation to the central bank's preferred 2% target.
"If it becomes appropriate to tighten policy further, we will not hesitate to do so," Powell said, adding that "the Fed is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time. We are not confident that we have achieved such a stance."
Powell also said that rate decisions would be taken "carefully ... allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening. We are making decisions meeting by meeting."
U.S. stocks extended declines following the release of headlines from Powell's remarks, with the S&P 500 marked 33 points, or 0.75%, lower on the session and the Dow Jones Industrial Average falling 248 points.
Benchmark 10-year note yields, meanwhile, were marked 8 basis points higher on the day at 4.629%, although much of that upside move followed a weaker-than-expected auction of 30-year bonds earlier in the session.
Last week's pullback in yields, which pushed 10-year notes below the 4.5% mark for the first time since September, may have compelled Powell to take a more hawkish tone.
Powell, who has said on many occasions that tight financial conditions – including higher Treasury yields – are helping the Fed in its inflation fight, may determine that markets have gotten over their skis with a rally that's extended for the S&P 500's past eight sessions.
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