Powell Sees March Hike As Appropriate

• Helping cement market pricing at the 25bp mark having climbed towards it earlier today, Powell will say in his upcoming testimony that he sees a rate increase as appropriate this month whilst the near-term impacts of the Russian invasion are highly uncertain.
• FOMC-dated Fed Funds futures show 26bps for Mar, 76bps for June and 131bps for Dec as they continue a recovery that started in today's London session.
• Selected excerpts:
• "Inflation increased sharply last year and is now running well above our longer-run objective of 2 percent. Demand is strong, and bottlenecks and supply constraints are limiting how quickly production can respond."
• "We continue to expect inflation to decline over the course of the year as supply constraints ease and demand moderates because of the waning effects of fiscal support and the removal of monetary policy accommodation. But we are attentive to the risks of potential further upward pressure on inflation expectations and inflation itself from a number of factors."
• "The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain. Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook."

Source: Bloomberg