Today’s talk of the town was Fed Chairman Powell testifying in front of the Senate Banking Committee.
As most congressional hearings go, this one was just as unhelpful as most are for market participants looking to gain an edge on the Fed’s overall policy stance. 👂
You can read Newsweek’s solid summary, but we’ll recap below. 📰
Congress members spent their time taking jabs at the Fed over inflation. Some seemed to think Powell controlled the oil supply, grilling him on oil and food prices, which have been a significant driver of the headline inflation number. But alas, he is not moonlighting on an oil derrick in his spare time. 🛢️
Meanwhile, Powell spent his time reassuring congress members that the Fed is committed to bringing down inflation. However, he reiterated that its monetary policy tools don’t affect some critical components like energy and food. 🧰
He also noted that a recession is “certainly possible,” but not in the near term as the U.S. economy remains “in good shape.” 👍
That received pushback from congress members who think the Fed has been behind the curve. And as we discussed last week, the market also seems to disagree with the Fed’s assessment of the economy. 👎
At the end of the day, nothing changed from today’s testimony.
Congress members got to express their grievances/concerns to earn some political points, and Powell did his best to calm them while not spooking markets with any new policy information.
Other Fed member speeches today pointed to further tightening in the months ahead, which the market largely expected anyway. 📈
For now, we all know the problem is inflation and the blame game will continue until it comes down, that’s just how it is. 👉👈
How and when it will revert lower remains the big question… 🤔
P.S. in case we haven’t said it enough, inflation remains a global issue. Today’s data showed that U.K. and Canadian inflation rates remained near 40-year highs. 🌐