Federal Reserve Chair Jerome Powell has said that additional interest rate increases will be needed to cool inflation and borrowing costs may need to peak higher than previously expected if the strong jobs market persists. Powell said in a question-and-answer session at the Economic Club of Washington on Tuesday that the process of getting inflation down has begun but has a long way to go and is in the early stages.
Markets are now pricing in 100% odds that the Fed will hike a quarter-point on March 22 and 76% odds that the Fed will hike another quarter-point on May 3, which would bring the federal funds rate to a 5%-5.25% range.
In December, Powell said to effectively fight inflation, it's better to raise interest rates too much than too little. He reiterated this thought on Monday, saying “We have a job to do. We know that raising rates can put a lid on inflation. We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.”
The stunning US jobs report last week showed 517,000 new jobs in January, far higher than expected and a sign of the continuing strength of the jobs market. This raises the question of how the Fed will incorporate the data when deciding how high to raise interest rates next month to keep the US on track to reach its pre-pandemic 2% inflation level goal.
Today, investors are anxiously anticipating a speech by Jerome Powell, Federal Reserve Chairman, at the Economic Club of Washington. Markets are eagerly awaiting any sign of what future interest rate movements may be after last Friday's jobs report exceeded expectations. Powell's hawkish remarks will shape the direction of the market in the days ahead.
Overall, investors will be looking for more clarity around the path of U.S. interest rates today, with Federal Reserve Chair Jerome Powell due to speak at the Economic Club of Washington at 12:40 p.m. 
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1. “Fed's Powell speaks on economy, job market” The Washington Post, 7 Feb. 2023, https://www.washingtonpost.com/business/2023/02/07/powell-economy-jobs/
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3. “Americans will see ‘significant decline in inflation' in 2023: Powell” Business Insider, 7 Feb. 2023, https://www.businessinsider.com/when-will-inflation-go-down-significant-decline-this-year-powell-2023-2
4. “Powell Warns Another Hot Jobs Report Could Trigger More Rate Hikes—Here's What That Means For The Stock Market” Forbes, 7 Feb. 2023, https://www.forbes.com/sites/dereksaul/2023/02/07/powell-warns-another-hot-jobs-report-could-trigger-more-rate-hikes-heres-what-that-means-for-the-stock-market/
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6. “Stock Market News Today: Indices Turn Volatile after Powell Speech” TipRanks, 7 Feb. 2023, https://www.tipranks.com/news/stock-market-news-today-futures-up-ahead-of-powell-speech
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8. “S&P 500 Flashes Bullish Golden Cross On Powell Inflation Control; Apple, Microsoft Show Healthy Pullbacks” Investor's Business Daily, 7 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-falls-market-awaits-powell-test-for-next-run-apple-microsoft-set-up-in-healthy-pullback
9. “Stock Market Today: Dow, Nasdaq Close Over 200 Points Up After Remarks By Fed's Powell” The Wall Street Journal, 7 Feb. 2023, https://www.wsj.com/livecoverage/stock-market-news-today-02-07-2023