Federal Reserve Chair Jerome Powell came off hawkish in testimony to Congress this week, noting the Fed is aware that continued high inflation is causing significant hardships.
What Happened: "We have covered a lot of ground, and the full effects of our tightening so far are yet to be felt. Even so, we have more work to do," Powell said in a statement to the House Financial Services Committee.
The central bank acknowledged that recent data is moving in the wrong direction and that inflationary pressures are running higher than previously expected. Getting inflation back down to the 2% goal is likely to be "bumpy" and the process still has "a long way to go," Powell said.
"We will continue to make our decisions meeting by meeting, taking into account the totality of incoming data and their implications for the outlook for economic activity and inflation," Powell said.
Related Link: Fed Chair Jerome Powell Sees 'Bumpy' Inflationary Road Ahead: Markets Tip Toward 0.5% March Rate Increase
Why It Matters: The Fed chair highlighted the importance of incoming data in an early exchange with House lawmakers Wednesday in which he was asked about the Fed's upcoming meeting.
"A jobs report on Friday and a CPI and PPI inflation report next week ... those will be important and we'll scrutinize them," Powell said.
He told the House Financial Services Committee Wednesday the new data will help to better contextualize recent data that has come in hotter than the Fed forecasted at its last meeting, adding that the Fed remains data dependent and still needs to see more.
"We have not made any decision about the March meeting. We're not going to do that until we see the additional data," Powell said.
The bond market is projecting more than a 70% chance of a 0.5% rate hike at the Fed's meeting later this month, per CME Group data. That number has climbed significantly from around 40% at the beginning of the week.
The Fed chair urged lawmakers to raise the debt ceiling and noted that no one should assume the Fed can protect the economy if the ceiling is not lifted. He indicated the central bank will continue to use all of its tools and pushed back when asked about changing expectations.
"Two-percent inflation is going to remain our longer-term inflation goal ... it's the global standard and it's our standard and this is not a time at which we can start talking about changing it. We have no instinct to do that," Powell said.
See Also: More Fed Rate Hikes? No Problem: Why Wharton's Jeremy Siegel Is Optimistic About Economy, Markets
SPY Price Action: The SPDR S&P 500 SPY has been volatile amid Powell's testimony.
After falling sharply Tuesday, the SPY was trading flat at $398.18 at the time of publication, according to Benzinga Pro.
Photo: courtesy of the Federal Reserve.
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