The chairman of the US central bank has issued a warning that policymakers may hike interest rates more quickly and significantly than initially anticipated in an effort to stabilize the market.
Following the comments, which came just a few weeks before the bank is scheduled to make another rate announcement, US markets plummeted and the dollar increased.
Many analysts had anticipated an additional 0.25 percentage point rise.
But, the statements imply that the bank could act more forcefully.
The Fed increased its benchmark rate over the past year to above 4.5%, the highest level since 2007, in response to prices rising at the quickest rate in decades.
The US’s inflation rate, which measures how quickly prices rise, was 6.4% in January.
Mr. Powell said authorities have been concerned by recent data suggesting that momentum may be stagnating. While that is lower than it once was, it nevertheless remains far higher than the 2% rate considered healthy.
That, he claimed, might force the bank to increase rates above the 5% to 5.5% that officials had predicted in December.
