The FED is finally listening

FED’s Powell 2nd Day Testimony at the US Senate

Posted Wednesday, June 17, 2020 by
Skerdian Meta • 1 min read
Jerome Powell testified at the at the US Congress yesterday and he is making his second appearance today. The Fed’s Powell has begun his Q&A to the House financial services panel. It is largely expected that he mirrors responses from yesterday. The Fed Chair has been consistent with his call for fiscal policy.  Of course Pres. Trump has been a critic of Powell in the past for not providing enough monetary policy.  The recent comments from the White House center around a $1 trillion+ additional stimulus package.
However, there has been some push back from some fiscally conservative Republicans. Of course it is an election year, however, and the Pres/Republicans are at risk of losing the presidential election and control of the Senate. With risk of a more modest, prolonged bounce with the lower paid workers paying the greatest price, the chance for more stimulus is likely if they have hopes to win the election.
  • Congressional support is critical at this time
  • Encouraging banks to lend to the Main St. lending programs
  • Fed is a learning by doing and will keep taking feedback
  • Evidence is mixed on negative rates
  • Repeats that Fed not decided to adapt yield curve control
  • Nothing like tight labor market for low income communities (the opposite is true too).
  • The Fed will move away from ETF’s to bonbons over time
  • Buying cash bonds will the primary way the Fed supports market function
  • Markets working pretty well so buying will be at low end
  • Fed intends to hold to maturity, doesn’t rule out sales
  • Delays recovery if state, local government layoffs continue
  • If people lose unemployment benefits, the strain it causes will curb spending in the economy
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