by Wolf Richter
Wolf Street
Why the Fed vigorously backpedaled on further rate cuts and pivoted to wait-and-see: Long-term interest rates matter.
Fed Chair Powell, at his testimony before the Senate Committee on Banking, Housing, and Urban Affairs today, included his nearly standard line about longer-term inflation expectations being “well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets.” The first three are survey-based – what households, businesses, and forecasters see coming at them. The last is based on trading results in the Treasury market, what the Treasury market sees coming at it. It’s the bond market talking here, and the bond market is getting worried again about inflation.