US stocks close turbulent week with modest advance after Fed commitment

US stocks rose on Friday after traders weighed in on comments from Federal Reserve officials who reiterated that the central bank must do more to rein in 40-year-high inflation.

Here are some of the major movements in the markets:

Fed: commitment to restore stability is ‘unconditional’

The Federal Reserve said it would do what is necessary to control prices, reiterated that price stability is necessary to support a strong labor market and called its commitment to control inflation “unconditional.”

“The committee is well aware that high inflation imposes significant hardships, especially on those who are least able to afford the higher costs of essentials,” the statement said. fed in his semi-annual report to Congress published this Friday. “The committee’s commitment to restore price stability, which is necessary to maintain a strong labor market, is unqualified.”.

The report, which provides lawmakers with an update on economic and financial developments and monetary policy, was posted on the central bank’s website ahead of its chairman Jerome Powell’s testimony before the Senate banking panel on Wednesday and House Financial Services Committee a day later.

The officials of the fed raised this week Reference rate by 75 basis points, the largest increase since 1994, noting that more increases are coming to combat a rate of inflation in a maximum of 40 years. Powell said the central bank could increase rates by 50 basis points or by 75 basis points in July, depending on what happens with inflation and the economy.

Those in charge of economic policy decided on a rate increase more aggressive after an inflation report last week came out more positive than expected and some preliminary surveys suggested that consumer inflation expectations may be rising.

The officials of the fed They consider that keeping inflation expectations anchored is an important step to prevent price increases from getting out of control. The consumer price index rose 8.6% in May from a year earlier, according to data released last week by the Labor Department.

Financial conditions tightened “significantly” this year when the fed raised the interest rates in response to higher inflation, with stock prices falling and corporate bond yields rising, the Fed. Funding pressures also emerged in commodity markets after Russia invaded Ukraine, but the financial system remained “resilient”, the central bank said.

Recent stresses on stablecoins and other digital assets shed light on the vulnerabilities of those markets, said the fed.

“The collapse in the value of certain stablecoins and the recent stresses experienced in the markets of other digital assets demonstrate the fragility of such structures”said the report.

Working market

The central bank’s efforts to calm inflation could cause the unemployment rate US inflation rises from current levels, a change Powell says may be needed to cool down an overheated labor market. In May, the unemployment rate was 3.6%, just above pre-pandemic levels, when the tunemployment rate it was the lowest in 50 years.

The job market still looks tight for now, with demand for labor outstripping supply and some employers struggling to fill vacancies, the agency said. fed in the report. “That said, some possible signs of a modest easing of labor market tightness have emerged recently.”said the fednoting that some measures of wage growth may have moderated, while employers in some Fed districts have seen “modest improvement” in their ability to find workers.