Treasury yields rose after Jerome Powell poured cold water on Wall Street’s hopes that the Federal Reserve is done raising rates.
The president warned the US central bank against the risk of being “misled” by good price data, saying the mission to return inflation to 2 percent had a “long way to go.”
At an IMF event, Powell said officials were “gratified” by the decline in price pressures, but stopped short of signaling that all was well.
“We know that continued progress towards our 2 percent goal is not assured, inflation has given us some lies,” he said.
“If it becomes appropriate to tighten the policy further, we will not hesitate to do so.” Powell’s comments come just as traders began betting that the steepest tightening cycle in a generation is over.
Feed Chairman Jerome Powell warned the US central bank against the risk of being “misled” by good price data, saying the mission to return inflation to 2 had a “long way to go” .
They also follow the central bank’s latest policy meeting, in which officials extended a pause on rate hikes.
Treasuries remained under pressure, with the 30-year yield rising 0.13 percentage point on the day to 4.8 percent, while the benchmark 10-year yield rose 0.11 percentage point to 4.62 percent. Bond yields move inversely to prices.
The comments come as Bank of England chief economist Huw Pill gave the clearest indication yet that interest rates in the UK have peaked.
At a conference, Pill warned that rates would stay high for an extended period to drive inflation out of the system, but said they were unlikely to rise again.
“Having set monetary policy in restrictive territory, it is not true that we need to raise rates to curb inflation,” he said at an Institute of Chartered Accountants in England and Wales (ICAEW) event.
“Keeping rates at their current restrictive level will continue to put pressure on inflation.”
His comments are a further sign of a rift between Pill and Bank of England Governor Andrew Bailey, who has not said whether rates have peaked and this week poured cold water on expectations of a cut by the middle of next year. anus.
“It’s too early to talk about cutting rates,” Bailey said at an event hosted by the Central Bank of Ireland on Wednesday.
Bailey’s comments came after Pill said rates could begin to decline from their 15-year high in August 2024.
Yesterday he stopped short of setting a timeline for how long rates will remain in place, but on Monday he said a cut by the middle of next year did not seem “totally unreasonable.”
Figures show the inflation rate was 6.7 per cent in September, above the Bank’s target of 2 per cent. Short and long term UK government bond yields rose yesterday.
Benchmark 10-year bond yields rose 0.03 percentage points to 4.27 percent, while two-year bond yields rose 0.02 percentage points to 4.64 percent.
The pound fell 0.5 per cent against the dollar to £1.2227.