Fed’s Powell spooks markets with hawkish comments

The news: Federal Reserve Chair Jerome Powell has said the US central bank officials are not confident that interest rates are yet high enough to finish the battle with inflation.

The numbers: The comments, delivered in a speech to an International Monetary Fund research conference, comes with inflation well above the Fed’s long-standing goal of 2% despite a series of 11 rate hikes that have lifted its benchmark rate from near zero to a target range of 5.25%-5.5%.

The context: Powell said Federal Reserve officials "are not confident" that interest rates are yet high enough to finish the battle with inflation, and may be nearing the end of how much help they can expect in lowering price pressures from improvements in the supply of goods, services and labour. Stocks deepened their losses after the speech while the US Treasury 10-year yield moved higher to 4.638%. Investors had been harbouring hopes of a rate cut by the middle of next year after the Fed last week left its rates untouched.