The SPDR S&P 500 ETF Trust (NYSE:SPY) has rallied 3.2% in the past five days as investors seem to be taking an increasingly bullish tone toward the health of the U.S. economy, particularly on the inflation front. However, hawkish remarks from Federal Reserve officials this week suggest investors may be premature in assuming the Fed will be shifting its monetary policy approach anytime soon.
The Federal Reserve raised its target fed funds rate by 0.75% last week to a new range of between 2.25% and 2.5%, its second 0.75% rate hike in two months. The market has reacted strongly to commentary by Fed Chair Jerome Powell that he does not believe the U.S. economy is in a recession because of the resiliency of the labor market. However, several Fed officials have come out this week to emphasize that inflation, not the jobs market, is the Fed's top priority.
