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BLOOMBERG
Jerome Powell will be in the Capitol Hill spotlight a week after the Federal Reserve paused its most aggressive tightening campaign in decades, with investors watching for clues on whether central bankers are indeed leaning toward further interest-rate hikes.
The Fed chair will deliver the central bank’s semi-annual monetary policy report to the House on Wednesday and the Senate the following day. Separately, three Fed nominees face potentially contentious confirmation hearings.
Powell is likely to face questions over the Fed’s decision to take a break after 10 straight interest-rate increases as it evaluates how the economy is responding to higher borrowing costs and recent banking stress. The decision was puzzling to many, since officials’ latest median forecast shows the benchmark rate rising to 5.6% by year end, compared with their March projection of 5.1%.
Democrats may applaud the Fed for taking a breather and remind Powell that overdoing the rate hikes risks pushing millions of Americans out of work. Republicans could hammer home the message that inflation is still too high, causing pain for households and small-business owners.
And both sides may pressure Powell to explain how the central bank plans to improve financial supervision after the failure of several regional banks this year.
On Wednesday, Fed Governors Philip Jefferson and Lisa Cook, and nominee Adriana Kugler, currently the US representative to the World Bank, face members of the Senate Banking Committee as part of their confirmation process.
Jefferson, who garnered bipartisan support when first nominated for a board seat, was tapped by President Joe Biden to be promoted to Fed Vice Chair. Kugler would be the first Latina to serve on the Fed’s Board of Governors, and Cook was re-nominated since her current term expires early next year.