Jerome Powell Refuses to Humor Bond Traders’ Tantrums
The Fed indicates inflation will rise above 2% but doesn’t flinch on forecasting rates near zero.
Standing his ground.
Photographer: Daniel Acker/Bloomberg
The $21 trillion U.S. Treasury market already set the narrative ahead of the Federal Reserve’s decision on Wednesday. Benchmark 10-year yields stormed to the highest level since January 2020, while 30-year yields reached 2.44% for the first time since August 2019. Bond traders were throwing yet another tantrum as if to dare Fed Chair Jerome Powell and his colleagues to stop them.
Instead, Fed officials stayed true to their new framework. Yes, economic growth will likely be robust this year, and inflation will probably average 2% over the coming years. But until they see proof, they’re not going to be in any hurry to start penciling in interest-rate increases.