Jerome Powell sends markets lower as Fed Chair reiterates higher-for-longer interest rates

The U.S. financial markets are not happy with Federal Reserve Chair Jerome Powell.

For whatever reason, they are hoping that the central bank will tergiversate and turn dovish on monetary policy.

But Powell insists that its tightening campaign will persist to ensure inflation is stopped in its tracks.

He uttered the same sentiment in a question-and-answer session at the Cato Institute on Friday.

“History cautions strongly against prematurely loosening policy,” he said. “I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done.”

Here is a live video of the event:

This comes one day after his right-hand woman, Fed Vice Chair Lael Brainard, explained that interest rates will increase and stay there until inflation comes down.

“We are in this for as long as it takes to get inflation down. So far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further,” she said.

“With a series of inflationary supply shocks, it is especially important to guard against the risk that households and businesses could start to expect inflation to remain above 2 percent in the longer run, which would make it much more challenging to bring inflation back down to our target.”

At the same time, she warned that overtightening could lead to risks for the broader U.S. economy.

Cleveland Fed Bank President Loretta Mester does not think inflation has peaked, so more rate hikes are necessary.

Whatever path the Eccles Building takes, the financial markets were frustrated with Powell as the leading benchmark indexes declined in early trading.

The Dow Jones Industrial Average lost more than 100 points, the S&P 500 shed 0.35 percent, and the Nasdaq Composite Index dropped 0.5 percent.

The benchmark ten-year Treasury yield was flat at 3.264%. The U.S. Dollar Index (DXY), a gauge of the greenback against a basket of currencies, was also unchanged at 109.83, although it is up about 15 percent year-to-date.