Federal Reserve Chairman Jerome Powell’s testimony on the central bank’s semi-annual report on monetary policy and the economy has been brought up a day to Tuesday, Feb. 27 before the U.S. House of Representatives’ Financial Services Committee, no reason has been given.
Federal Reserve Chairman Jerome Powell’s testimony on the central bank’s semi-annual report on monetary policy and the economy has been brought up a day to Tuesday, Feb. 27 before the U.S. House of Representatives’ Financial Services Committee, no reason has been given.
When: 10:00 AM ET/ 15:00 GMT.
Fed Chair Powell testifies in front of the U.S. House of Representatives’ Financial Services Committee
The committee had previously scheduled his appearance for Wednesday, Feb. 28. The hearing will be held at 10 a.m. (1500 GMT), said the committee, which did not provide a reason for the change. Investors and lawmakers will be listening for clues on market stability given his tenure began with one of the fastest 10 percent falls in US stockmarkets in history. including the biggest Dow Jones point loss ever.
There is little doubt that the last successive Fed chairs has lulled markets into complacency and a concept of no risk. Former Fed chair Janet Yellen had even said the stockmarkets will not crash in her lifetime at one point.. The idea of a Fed “put” option under the three prior Fed leaders; Janet Yellen, Ben Bernanke and Alan Greenspan has been a feature of the bull market run since 2009.
The market and investors still for the most part remain complacent of risk despite the minutes of the Fed’s FOMC meeting on Jan. 30-31, published on Wednesday, showed the FOMC expressing the need to keep raising interest rates. The majority view of the FOMC is inflation will rise further. The Fed’s semi-annual monetary policy report to Congress on Friday in its first under new chair Powell, said the Fed sees steady growth continuing and no serious risks on the horizon that might make the central bank pause its planned pace of rate hikes. The stockmarkets on Friday shrugged any risk off.
“The economic expansion continues to be supported by steady job gains, rising household wealth, favorable consumer sentiment, strong economic growth abroad, and accommodative financial conditions,” the report said.
The S&P index closed Friday up 1.60% at 2747.33. The Nasdaq closed up 1.77% at 7337.39 and the Dow closed up 347.51 points or 1.39% at 25309.99. Clearly there is no fear of risk, downside or what Powell has to say. This despite we are in the midst one of the more hawkish Feds we have experienced in over 20 years.
If we look back at 2008 we saw an inflation obsessed Fed who stood by as subprime mortgage products led to systemic problems in markets that lead to the worst global recession since the 1930s.
Of note is that back when Powell first became a Fed governor back in 2012, he was one of the hawks who pressured then chair Bernanke for more clarity on his plan to “taper” the central bank’s bond buying or quantitative easing.
Following Bernanke’s plan we had the media termed “taper tantrum” bond market rout in the summer of 2013. Again in 2015 Powell showed his ‘hawkish talons’ when he argued two interest rate rises might be needed. He did backtrack when the Chinese stock market melted down that year. The Fed raised rates only once in 2015, in December.
Powell’s speeches have been consistent on how the extended loose U.S. monetary policy has given the labor market time to recover, allowing the unemployment rate to fall from a high of 10 percent in 2009 to a 17-year low of 4.1 percent in January this year. So does the Fed take actions that sustain the expansion or dwell on potential inflation headwinds?
Jerome H. Powell took office as Chairman of the Board of Governors of the Federal Reserve System on February 5, 2018, for a four-year term. Mr. Powell also serves as Chairman of the Federal Open Market Committee, the System’s principal monetary policymaking body. Mr. Powell has served as a member of the Board of Governors since taking office on May 25, 2012, to fill an unexpired term. He was reappointed to the Board and sworn in on June 16, 2014, for a term ending January 31, 2028
He is in for a long time, lets see how the market reacts to his first testimony.