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Powell has spoken: Higher rates and faster hikes are on the table.

What you need to know today

• Interest rates are "likely to be higher than previously anticipated" because of stronger-than-expected economic data, Federal Reserve Chair Jerome Powell told Congress.

• U.S. stocks sold off sharply on Tuesday after Powell's hawkish comments. All three major indexes fell as Treasury yields jumped. Hong Kong's Hang Seng index plummeted 2.53% Wednesday, leading losses in the Asia-Pacific region.

• Warren Buffet's Berkshire Hathaway bought 5.8 million shares of Occidental Petroleum from Friday to Tuesday, totaling more than $350 million. Berkshire now owns 200.2 million shares of the company, worth $12.2 billion.

• The economic fallout from a short seller's attack on the Adani Group will likely subside, said an economist. But there could be long-term political implications for India, given the conglomerate's close ties with Prime Minister Narendra Modi.

• PRO Powell is reopening the door to raising rates by half a percentage point, said Morgan Stanley economists. They are watching this key economic data for more hints on the Fed's future moves.

The bottom line

There's no need to speculate anymore — in the first of his Congressional hearings, Powell said outright that the Fed might raise interest rates higher and faster than officials had projected last year. His exact words: "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 … we would be prepared to increase the pace of rate hikes." This means that rates could not only go beyond 5.25%, but the Fed could also return to 50-basis-point hikes.

Markets didn't like it. The Dow Jones Industrial Average shed 1.72%, the S&P 500 dropped 1.53% and the Nasdaq Composite lost 1.25%. There are some important statistics here: the Dow is now 0.9% below what it was at the start of the year, and the S&P, while still up 3.8%, closed below the psychological 4,000 level, suggesting that investors could get spooked further. Indeed, bank shares, which tend to be a bellwether for investors' sentiment about the economy, led losses. Wells Fargo dropped 4.68% while Bank of America, Goldman Sachs and JPMorgan Chase lost about 3% each. U.S. Treasury yields jumped even more than they had in the past week. The yield on four notes — the 3-month, 6-month, 1-year and 2-year — breached 5%.

But not everyone is convinced that monetary policy will tighten faster. "I do not think the Fed goes 50 bps at any of the remaining rate hike meetings at this point after already slowing the pace and will continue on with 25 bps until it finally stops," wrote Peter Boockvar of Bleakley Financial Group — though he admitted he could only come to this calm conclusion after taking an Advil. While I'm not recommending everyone have an Advil, it's good sense to take a breather and wait until the February jobs report is released on Friday before making any snap decisions.

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