Crypto News: Powell’s shifting gears

Hello and Happy International Women's Day. Today we look at how the Fed could accelerate its pace of tightening after having only just slowed it, an influx of Russians into Argentina and the lingering gender gap across the globe.

Less than five weeks after the Federal Reserve slowed its pace of interest-rate hikes, Chair Jerome Powell on Tuesday served warning it may need to re-accelerate.

Powell, who on Feb. 1 declared he could now say the "disinflationary process" had begun, delivered a notably different message at a congressional hearing Tuesday morning, as Craig Torres reports.

"The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," Powell said. "If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes."

In other words, the Fed's eventual peak rate is likely higher than it saw in a December forecast (5.1%), and the door is open to hiking by 50 basis points on March 22, after policymakers had just slowed to 25 last month.

Investors and economists alike were sent scrambling after Powell's appearance at the Senate Banking Committee:

Two-year Treasury yields climbed above 5% for the first time since 2007.
The S&P 500 lost 1.5%.
Goldman Sachs economists added a quarter point to their forecast for the peak rate, taking it to a range of 5.5% to 5.75% — a percentage point higher than officials' current target.
The research group LH Meyer/Monetary Policy Analytics switched its call for March to a 50 basis-point hike, from 25.

Michael Feroli at JPMorgan Chase wasn't quite ready to flip to 50, ahead of key economic data for February — which include payrolls, consumer prices and retail sales.

But he told Bloomberg TV it will be tough for Powell to walk back his Tuesday message without those releases coming in "not just in-line, but weaker than expected."

While Powell has long stressed the Fed must be nimble in setting policy at a time of high uncertainty about the economic outlook, his shift could feed questions about whether the Fed was premature in slowing to a quarter-point clip last month.

"Every time they take the foot off brake — or the market perceives they're taking the foot off the brake — and the job's not done, they make their work even harder," said Ken Griffin, the hedge fund billionaire who founded Citadel, said in an interview with Bloomberg Tuesday.

Griffin said the Fed had been "counterproductive" in its messaging lately.

There's more opportunity for messaging Wednesday, when Powell is up before a House panel.

As for the future, former Treasury Secretary Lawrence Summers took the over while ex-International Monetary Fund chief economist Olivier Blanchard took the under in a good-natured debate on Tuesday about the level rates over the long haul.

—Chris Anstey

Got tips or feedback? Email us at ecodaily@bloomberg.net

100% inflation or a war-time economy?

For many Russians, the choice is easy as they increasingly head to Argentina and inflation nearing three digits.

As Scott Squires reports today, the Latin American nation is providing a refuge from the war, a growing clampdown on dissent back home and the strict visa restrictions that have sprung up against Russians in other parts of the world.

More than 22,000 Russians have entered Argentina since the start of last year, although around 60% of those have already left, according to Argentina's immigration ministry.

The influx of mostly highly-skilled Russians could help Argentina plug a gap left by educated people moving to Europe in recent years to escape economic uncertainty

Coming up | The Bank of Canada is set to become the first major central bank to hit pause on interest rates. Meantime, Poland is set to keep borrowing costs on hold today.
Seeking prudence | Ignazio Visco openly criticized hawkish European Central Bank colleagues for making statements about future increases in borrowing costs when officials had agreed not to give such guidance. Meanwhile, the euro-area economy failed to expand at the end of 2022.
Japan wages | Annual pay increases at the country's small firms could increasingly sway monetary policy.
Pause prospect | Australia's central bank has a "completely open mind" about its April meeting and will be guided by key data on whether to raise interest rates further or pause tightening, Governor Philip Lowe said.
Investment push | Chancellor of the Exchequer Jeremy Hunt is considering giving British firms extra tax relief on investment spending as he seeks measures to boost economic growth in his spring budget.
Money buys happiness | Forget what you heard about there being no benefit once income reaches $75,000, according to new research.

The proportion of women in senior- and middle-management positions still lags men by a significant margin, according to research by Moody's Analytics — in the the UK, France and Turkey it's even in decline.

Worryingly, sectors expected to drive future productivity such as IT have a much lower share of female leaders than other service sectors.

On International Women's Day, that suggests "women are primed to miss out on the potential wage and income gains from this rapidly expanding sector," according to authors Dawn Holland and Katrina Ell.

In all sectors, gender gaps widen as you move up the seniority ladder, the report finds, with only 23% of executive roles held by women.

As we wrote in this newsletter last week, the global economy is losing out on at least $7 trillion of economic gains each year due to a failure to reach gender parity in the workforce.