The Federal Reserve dropped the Monetary Policy Report to Congress on Friday, June 12 in advance of Chair Jerome Powell’s semiannual monetary policy testimony before the Senate Banking Committee at 10:00 ET on Tuesday and the House Financial Services Committee at 12:00 ET on Wednesday. In keeping with efforts to limit the spread of COVID-19, both testimonies will be via video conference. I would look for the Chair’s prepared remarks to be released at 10:00 ET on Tuesday. I would note that the start time for the testimony before the House committee on Wednesday is two hours later than normal.
I also observe that the date on which the testimony will take place is unusually early in the year. It is far more usual that it is scheduled around mid-July. The 2020 summer date is even earlier than the June 21, 2016 testimony. There is no particular significance to this other than the June FOMC meeting was somewhat earlier in the month than usual and that Fed policymakers could therefore be prepared for the Chair’s appearance without the need to delay. There is also that the present economic conditions make it desirable for Congress to hear what the Fed Chair has to say in order to shape their response to the COVID-19 pandemic and the need for fiscal action to mitigate the impacts. Doubtless Committee members will be glad to have this out of the way before the July 4 recess period and before the election campaign season starts to heat up afterward.
For a history of dates and timing of semiannual monetary policy testimonies, see the Whetstone Analysis Reference Library.
Powell’s prepared remarks are unlikely to be much different in tone or content from those he gave at the start of his post-FOMC meeting press briefing at 14:30 ET on Wednesday, June 10. He will reiterate the steps the Fed has taken in wake of the crisis – rate cuts, credit facilities, supervisory and regulator forbearance. He will outline the present condition of the economy and then the risks and uncertainties that face it both at home and abroad while the pandemic has yet to be brought fully under control, much less reached an end. It is likely to be as realistic and balanced an assessment of conditions as Congress is going to get.
I do not anticipate more than pro-forma questions directly about monetary policy, and those to be dealt with quickly. These testimonies have become less about how the Fed intends to achieve maximum employment and price stability than about topics like regulatory and supervisory burdens, social issues like income inequality, and not-so-subtle efforts to get the Chair to weigh in on political issues. He will address the former, but not the latter two. Powell has proven as adept as his predecessors of respectfully not exceeding the remit of the Fed Chair and maintaining the independent stance of the central bank.
A footnote to the testimony will be that the release of the June 9-10 FOMC meeting minutes at 14:00 ET on Wednesday, July 1 will be a non-event. With the Monetary Policy Report available, the testimony to clarify them, and the release of FedListens: Perspectives from the Public on June 12 (Part of the Federal Reserve’s Review of Monetary Policy Strategy, Tools, and Communications Practices), the minutes will not have much to add and could well have been superseded by events since these will be three weeks old at that point. The review of the framework of monetary policy is not yet complete, but Powell should get credit for launching it and the extent of efforts to reach out to stakeholders in the US economy beyond Wall Street. A criticism that has long haunted the Fed is that it is too removed from Main Street. This review should help ease that perception.
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