Fed Chair Powell spoke about the state of the monetary policy on Capitol Hill today. steveliesman recaps some of the biggest topics, from the coronavirus outbreak to the repo market.
Powell's remarks recapped the Fed's 61-page semiannual report that lawmakers received on Friday. He said the economy is growing at a "moderate" pace, and he noted that the fundamentals supporting household spending are still "solid."
"Interest rates aren't going up under his watch without more inflation and that is music to the stock market's ears," said Chris Rupkey, chief financial economist at MUFG Union Bank.Powell also highlighted the strong gains in the labor market. He pointed to the large number of job openings and said employers are more willing to hire and train workers with fewer skills.
Powell cited two long-run challenges to the economy in his testimony: the low labor force participation rate and productivity gains. He also weighed in on the federal budget, arguing that lawmakers should tackle ballooning deficits and the national debt while the economy is strong to provide more room to react during the next downturn.
Powell's appearance before the House Financial Services Committee begins at 10 a.m. ET and follows a year in which the Fed made a sharp pivot, going from a series of steady rate hikes with more on tap ahead to cuts and a general easing in monetary policy.In addition to the wait-and-see approach on rates, the Fed has continued its daily liquidity injections into the overnight lending, or repo, market where banks get their short-term funding.
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