This website uses cookies. We use cookies to ensure that we give you the best experience on our website. Read More

Powell may be upbeat when testifying before Congress

11 Feb 2020 02:37 PM

Federal Reserve Chairman Jerome Powell is likely to appear somewhat optimistic about the future of US economic growth when he testifies today and tomorrow in his first twice-yearly updates to Congress, even while pointing to the potential threat from the Corona virus in China.

This assessment would echo the Federal Reserve's official report to the US Congress on Friday, which reiterated the central bank's view that its current target range for short-term borrowing costs between 1.5% and 1.75%, "appropriate" to sustain growth.

In fact, Powell made lawmakers a hallmark of his tenure, and within just two years of work, he spent about 96 hours in private meetings, phone calls, group meals, or study sessions with Senators and House members. This is compared to 77 hours for his predecessor, Janet Yellen, over four years as Fed Chair.

With risks such as the uncertainty in trade policy diminishing, Powell indicated that he saw no reason to adjust US interest rates unless there was a "fundamental" change in the current view.

This is a view that is likely to repeat when he presents the Federal Reserve's monetary policy report on Tuesday to the House Financial Services Committee and on Wednesday to the Senate Banking Committee.

Investors will be carefully watching any new details about the Federal Reserve’s plans for its general budget and short-term financing markets where it pumps cash to prevent an unexpected rise in interest rates in politics last fall.