The latest developments indicate the economy is entering a new phase, emerging from the shadows of the long-drawn contraction triggered by the 2008 crisis. And, the key interest rate is hopefully returning to its normal level from record lows.
Meanwhile, Powell has hinted at a balanced approach to monetary policy, and promised to closely monitor the setback suffered by the business sector in the aftermath of the stock market crash, while moving ahead with monetary tightening.
Adding to the woes of investors and signalling the sell-off could continue in the coming days, consumer price inflation accelerated at a faster-than-expected pace to 0.5% in January, driving the stock market further down. The S&P index retreated ending the brief recovery witnessed after the big crash, and treasury yields returned to the multi-year highs seen last week.
Powell has hinted at a balanced approach to monetary policy, and promised to closely monitor the setback suffered by the business sector in the aftermath of the stock market crash, while moving ahead with monetary tightening.
The inflation ghost had reared its head after government reports early this month showed a record fall in jobless rate and strong wage gains. Since then, inflation has been tightening its grip on the economy.
The situation calls for a closer examination of the effects the high interest rate could have on the broader economy. For instance, latest data revealed a marked dip in weekly mortgage applications, and there cannot be any other reason than the market turmoil.
Responding to the high commodity prices, the retail sales index, a key indicator of the health of the economy, registered the largest fall in nearly one year led by the automobile and the building sectors, contrary to expectations of a modest rise.