Stocks Walk on the Bright Side of the Road With Powell
The Federal Reserve chair exudes optimism about the strength of the economy and the fight against inflation.
Fed Chair Jerome Powell is confident the economy is strong enough to survive tighter monetary policy.
Photographer: Michael Nagle/Bloomberg
The stock market is drinking the Federal Reserve’s Kool-Aid. On a day when the central bank announced its first interest rate increase since 2018, U.S. equities rallied, signaling traders believed Chair Jerome Powell when he said the economy was strong enough to survive tighter monetary policy. The argument was compelling if far from bulletproof.
Speaking to reporters after the Fed’s decision to raise rates by a quarter percentage point, Powell said the probability of a recession within the next year was “not particularly elevated” despite the war in Ukraine, higher energy costs and the increase in rates required to combat the highest inflation in 40 years. Powell repeatedly pointed to the “strong labor market” and said some of the drivers of inflation should ease later in the year more or less naturally.