Federal Reserve Chair Powell noted that near-term inflation expectations have increased, reflecting heightened price pressures in the latest data. This shift has reinforced expectations for a more prolonged period of elevated interest rates, as tighter monetary policy remains necessary to anchor inflation. The comment is likely to intensify focus on upcoming CPI and PCE reports, with markets repricing rate differential expectations in the short end of the Treasury curve. Fixed income markets and rate-sensitive sectors such as real estate and growth equities are particularly exposed to further hawkish commentary. Traders will closely watch the next FOMC meeting minutes and the May jobs report for signals on whether the Fed may pause or resume rate hikes.
POWELL: NEAR-TERM INFLATION EXPECATIONS HAVE RISEN
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