Fed policymakers embrace more rate hikes, markets a little less

"It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all," Powell said at a hearing before the U.S. Senate Banking Committee, adding that the central bank in coming months will be looking for "compelling evidence" of slowing price pressures before it eases up on the interest rate increases it kicked off three months ago

A pair of U.S. central bankers said on Friday they supported further sharp interest rate hikes to stem rapid price rises, even as investors cheered economic data showing inflation expectations to be less worrisome than initially feared.

Last week, the Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point - its biggest hike since 1994 - to a range of 1.50% to 1.75%, and signaled its policy rate would rise to 3.4% by the end of this year.