Markets Watch Powell For Signs As Fed Chair Testifies Before Congress


In a semiannual report to Congress beginning Tuesday at 10 a.m., Federal Reserve Chair Jerome Powell will offer a glimpse into how officials are thinking about the economy as they continue their most aggressive tightening campaign in decades.

Key Facts

Powell’s testimony to the Senate’s banking, housing and urban affairs committee is expected to include a status report on the effectiveness of the Fed’s decision to hike interest rates to a 16-year high in order to combat inflation.

The target federal funds rate, which determines the lending rate between banks and strongly influences borrowing costs nationwide, was 4.5% to 4.75% on Tuesday, with yet another increase expected later this month.

Stocks were flat as Wall Street awaited Powell taking the stand, with the Dow Jones Industrial Average, S&P 500 and tech-heavy Nasdaq each moving less than 0.2% in early trading.

Vital Knowledge founder Adam Crisafulli cautioned in a Tuesday note that “even if markets catch a ‘Powell wasn’t that bad!’-driven rally…investors should keep their enthusiasm in check” before the more crucial employment report Friday.

What To Watch For

Powell’s report to Congress continues on Wednesday, when he testifies before the House.

What We Don’t Know

It’s unclear when the Fed will stop raising rates, but analysts at Goldman Sachs and Bank of America added another rate hike to their forecasts after a hotter-than-expected inflation reading last month. They now expect the central bank will raise rates to a top level of 5.5%, which would mark the highest level since the turn of the millennium. “Markets are admitting the Fed may not be close to done,” Sevens Report founder Tom Essaye told clients in a note of the stock market’s recent weakness.

This is a developing story. Please check back for updates.

Further Reading

Stocks Poised For Rally—But Don’t Expect It To Last (Forbes)

Dow Falls As Surprisingly Hot Inflation Data Threatens More Aggressive Fed Policy (Forbes)