Powell signals more pain to come with U.S. Fed sending rates higher

U.S. Federal Reserve Chair Jerome Powell vowed officials would crush inflation after they raised interest rates by 75 basis points for a third straight time and signaled even more aggressive hikes ahead than investors had expected.

“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” Powell told a press conference in Washington on Wednesday after officials lifted the target for the benchmark federal funds rate to a range of 3 per cent to 3.25 per cent. 

“Higher interest rates, slower growth and a softening labor market are all painful for the public that we serve. But they’re not as painful as failing to restore price stability and having to come back and do it down the road again,” he said.

The S&P 500 stock index ended near session lows -- pushing its slide from a January record to more than 20 per cent. The gauge struggled to find direction in the aftermath of the Fed announcement, climbing as much as 1.3 per cent at one point. Yields on the two-year Treasury note topped 4 per cent, piercing that mark for the first time since 2007. The dollar rallied.