Investors await Federal Reserve Chair Jerome Powell's semi-annual testimony on monetary policy before the Senate Banking Committee later in the day for clues on the central bank's future rate path amid a wave of strong economic data. Powell will deliver the same testimony before the House Financial Services Committee on Wednesday.Backdrop: The Fed chief's appearances at Capitol Hill follow the release of the central bank's monetary policy report. While the Fed eased its aggressive rate-hiking campaign, recent data could mean a return to bigger rate hikes to rein in stubbornly high inflation. Markets are largely expecting a 25-bp rate hike at the Fed's March 21-22 meeting, according to the CME FedWatch Tool, and have priced in the probability for 'higher for longer' interest rates. Meanwhile, San Francisco Fed President Mary Daly said disinflation is far from certain and the Fed is not done with tightening. Outlook: "All eyes will be on whether Powell uses the opportunity to strike a more hawkish tone," said Deutsche Bank's Jim Reid. "The question of most interest will be whether he indicates a preference to stick to the 25-bp pace going forward, or if 50-bp moves are still on the table." Wells Fargo expects the Fed to finish raising rates by mid-2023, "once disinflation and a more rapidly slowing economy are more evident." (4 comments)
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| Top News Kevin Dietsch Investors await Federal Reserve Chair Jerome Powell's semi-annual testimony on monetary policy before the Senate Banking Committee later in the day for clues on the central bank's future rate path amid a wave of strong economic data. Powell will deliver the same testimony before the House Financial Services Committee on Wednesday.
Backdrop: The Fed chief's appearances at Capitol Hill follow the release of the central bank's monetary policy report. While the Fed eased its aggressive rate-hiking campaign, recent data could mean a return to bigger rate hikes to rein in stubbornly high inflation. Markets are largely expecting a 25-bp rate hike at the Fed's March 21-22 meeting, according to the CME FedWatch Tool, and have priced in the probability for 'higher for longer' interest rates. Meanwhile, San Francisco Fed President Mary Daly said disinflation is far from certain and the Fed is not done with tightening.
Outlook: "All eyes will be on whether Powell uses the opportunity to strike a more hawkish tone," said Deutsche Bank's Jim Reid. "The question of most interest will be whether he indicates a preference to stick to the 25-bp pace going forward, or if 50-bp moves are still on the table." Wells Fargo expects the Fed to finish raising rates by mid-2023, "once disinflation and a more rapidly slowing economy are more evident." (4 comments)
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