July 10, 2024 at 03:41PM
Fed’s Powell is likely to repeat most of what he said during his day one testimony in the Senate yesterday. The faces are different with House banking committee representatives providing the questions to the Fed chair:
dual mandate has served us well.
On the balance sheet runoff, the Fed has made quite a lot of progress but there still is a ways to go.
It is hard to pick a precise stopping point but want a bit of a buffer. Going slower could allow them to go further
Policy is currently restrictive. The neutral rate must have moved up at least in the short term.
The fiscal path is unsustainable.
Inflation caused by very strong demand and constrained supply.
We have observed a waning of demand with increase in supply and inflation has come down.
Economy is growing around 2%, it feels like and with inflation in jobs these are good numbers.
Fed does not want to wait until inflation reaches all the way down to 2% to ease polity
Chair is not sending any signals on policy decisions
We want to have greater confidence which means more good inflation readings
We are not just an inflation targeting central bank, we have an employment mandate
Now the risks of the two mandates much closer to being in balance. We are looking at both sides.
This article was written by Greg Michalowski at www.forexlive.com.
