Fed: Powell’s semi-annual testimony before Congress in focus - Rabobank

For the first time in his new role as the Fed chairman Jerome Powell will deliver semi-annual testimony before Congress as today he will appear before the House Financial Services Committee and on Thursday he will be quizzed by the Senate Banking Committee, points out the research team at Rabobank.

Key Quotes

“After the turbulence of the last few weeks the markets will be hoping that the overall message from Powell will be in favour of the Fed to continue a gradual pace of monetary policy normalisation with the current dot plot envisaging three hikes this year.”

“A relatively hawkish tone from Powell that would imply that the Fed may seriously consider four moves throughout 2018 could undermine sentiment amongst investors. To recall, the hawkish Fed minutes published last week triggered further rise in US bond yields and weighed on US stocks.”

“While our baseline scenario assumes two hikes this year (in March and in June), we may have to revise our forecast upwards should the underlying trend in wages and inflation continue to improve.”