Federal Reserve Chair Jerome Powell made clear that inflation remains the top priority for policymakers after the second-biggest bank failure in U.S. history, less than two weeks after the second-biggest bank failure in U.S. history.
The Fed chief advised that more Fed tightening may be in place after Wednesday's interest rate hike, and that the central bank will raise rates higher than expected if needed. He said that officials don't expect to be cutting rates this year, even though the bond market showed traders doubling down on that outcome.
The recent banking turmoil will likely slow down the economy, but officials are making a calculated risk that it won't escalate into a broader financial meltdown. In 2007 a similar calculation was wrong, regulators are counting on higher capital and liquidity standards, and a more muscular response to ring-fence problems.
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