Fed has not yet decided the magnitude of the hike

Jerome Powell, president of the Federal Reserve (Fed), reaffirmed his message regarding bigger and faster interest rate hikes, however he stressed that the debate is still open and that the decision depends on the data that will be published before the monetary policy meeting to be held in two weeks.

Yes, and I stress that no decision has been made on this, if the totality of the data indicates that faster tightening is warranted, we are prepared to increase the pace of rate increases,” Powell told the Financial Services Commission. congressional.

Powell insisted on this point, in response to an explicit question about the expected outcome of the March 21-22 meeting posed by Rep. Patrick McHenry, the Republican chairman of the committee.

“We haven’t made any decisions but we will be watching the jobs data for Friday and the inflation data for next week to decide if it is necessary to raise rates again,” Powell reiterated.

As in Tuesday’s session, lawmakers pressed Powell on the impact Fed policy is having on the economy and whether central bank officials are risking a recession as they try to moderate price rises.

Powell acknowledged once again that the Fed was wrong in initially thinking that inflation was only the result of transitory factors that would subside on their own and that he is also surprised by how the labor market has performed during the recovery from the Covid-19 pandemic. .

“If we ever have this challenge again we will know how to deal with it,” Powell said.

Labor market does not lose strength

Employment in the private sector increased by 242,000 jobs in February, nearly double the figure of 119,000 registered in January and much more than analysts had expected, according to the ADP.

“We are seeing strong hiring, which is good for the economy and for workers, but wage growth is still quite high,” said Nela Richardson, chief economist at ADP.

Fed de Cleveland

Small businesses continue to recover from the pandemic

Small businesses continued to recover from the pandemic last year but faced significant challenges from inflation and the search for workers, a Cleveland Fed report said.

However, even as these small businesses saw better times in 2022 compared to previous years, conditions were more complex than those that prevailed before the pandemic, the bank noted in its 2022 Small Business Credit Survey.

For the first time since 2020, small businesses were more likely to report that revenue and employment levels increased rather than decreased in the past year and the proportion reporting operating profitably increased substantially year-over-year.

According to the report, the central bank surveyed 8,000 companies across the country with 500 or fewer employees.