Wednesday 28 February 2018

What to make of US Fed chairman Jerome Powell's hawkish testimony

Jerome Powell

Jerome H Powell, the newly minted Chairman of the US Federal Reserve (US Fed) came out as a clear hawk in his first testimony before the Congress on Tuesday.
Powell said that his expectations for domestic economic growth have increased since the beginning of the year, citing the passage of the $1.5 trillion tax cut, lifting of the debt ceiling and stronger global growth.
Our take on his testimony:
1. Clearly hawkish
His talons became visible when he answered a Democrat’s question as to what would cause the US Fed to hike more than three times that the central bank’s guidance currently calls for?
Powell said that each of the Federal Open Market Committee (FOMC) member would take the developments since the December meeting into account and write down ‘new rate paths as we go into the March meeting, and I wouldn’t want to prejudge that.’
2. Personal views take front seat
When the Fed Chair testifies, he speaks for the Federal Reserve, not for himself. But, Powell gave his personal views many times. This is a big break from the past like Janet Yellen, Ben Bernanke or Alan Greenspan.

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