Fed Powell testifies to House panel on the 2nd day of hearing
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.
- A concern of Congress withdrew support to quickly
- congressional support is critical at this time
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 pushback 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.
- 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
- the more we do now, the stronger the economy will be
- This not the time to worry too much about fiscal situation
