Fed Chair Jerome Powell is scheduled to deliver his semiannual monetary policy testimony on Tuesday and Wednesday, February 26 and 27 beginning at 10:00 ET. The first day is before the Senate Banking Committee, the second before the House Financial Services Committee.
You can be sure that both Congressional committee appearances will involve a number of politically-tinged questions that the Chair will decline to answer except in the broadest terms. In prior appearances before Congress, Powell has proven adept in avoiding giving answers in territory that could bring the independence of the central bank into question.
Whether it is a positive development or not, in recent years the Fed Chair – including Ben Bernanke and Janet Yellen in their time – has received fewer questions about the economy and monetary policy, and more about other areas. This time around might return the focus somewhat, but inquiries about stress testing and supervision of banks – especially small banks – and financial regulations – and how they impact other sectors like insurance – have been high on the list in the Q&A and will remain so. Taxation and deficits have also proven common topics from the respective Committee members. There have also been frequent questions about what the Fed can do to improve income inequality and promote better financial practices in regard to underserved communities. And do not forget the popular ideas of auditing monetary policy decisions and/or conducting monetary policy by formula. This winter’s testimony – at least on the House side – may well include questions about political interference from the White House.
The content and tone of Powell’s prepared remarks will likely echo the minutes of the January 29-30 FOMC meeting which will be released at 14:00 ET on February 20. As such, there are likely to be few surprises in his opening statement. But I do anticipate the Q&A to be livelier than it has been for a while.
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