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U.S. stock losses mounted Monday (Feb. 13) after a Fed official said economic growth appeared to be picking up, sparking inflation and interest-rate worries, according to CBS MarketWatch.
Stocks extended early losses after Sandra Pianalto, the president of the Cleveland Federal Reserve Bank, said early economic reports for January show the economy is doing better than the 1.1% growth rate in the nation’s gross domestic product in the last three months of 2005.
“That seems to offer support to some of the folks on the hawkish side of the argument,” said Art Hogan, chief market strategist at Jefferies & Co., referring to those investors who believe the Fed has still some way to go before it ends its cycle of interest rate hikes.
The Fed has raised its key short-term rate 14 times to 4.5% in a bid to slow the pace of economic growth and keep inflation at bay.
Hogan said the market will be parsing this week’s data for any signs of inflation, with traders also keen to hear new Federal Reserve chairman Ben Bernanke’s take on the economy when he addresses Congress in semi-annual testimony on Wednesday.