Watch Live: Powell Pushes Back Against Tapering Talk
Fed Chairman Jerome Powell is set to begin his latest round of Congressional testimony before the House Financial Services Committee – a committee that’s led by California Rep. Maxine Waters and stocked with left-wing “firebrands” like AOC – at 1200ET on Wednesday.
Readers can watch live below:
In his opening remarks – as we previewed earlier – the Fed chairman pushed back against the notion that the Fed should consider accelerating the process of tapering its asset purchases and raising interest rates, processes which it last abandoned long before the pandemic hit. His remarks helped propel the S&P 500 to fresh record highs at the open (though stocks have drifted lower since).
Powell repeated his favorite analysis of the ‘transitory’ inflationary forces pushing on prices: “strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind.”
As for rolling back the Fed’s ultra-loose monetary policy? That won’t be happening for a long time yet, no matter what Jim Bullard says (though Bullard will have slightly more influence when he becomes an FOMC voter again next year).
Said that “monetary policy will continue to deliver powerful support to the economy until the recovery is complete” which apparently won’t be for a long time as the jobs market is still “a ways off” from the “substantial further progress” needed to begin tapering its bond buying.
Some more details from Powell’s speech:
Household and business balance sheets are quite strong, core financial institutions are resilient
Strong job gains expected to continue in coming months as health crisis continues easing
Household spending rising at a rapid pace, housing demand is strong and business investment is solid
At our June meeting, the Committee discussed the economy’s progress toward our goals since we adopted our asset purchase guidance last December. While reaching the standard of “substantial further progress” is still a ways off, participants expect that progress will continue. We will continue these discussions in coming meetings. As we have said, we will provide advance notice before announcing any decision to make changes to our purchases.
In addition to pushing stocks back into the green (thereby keeping his critics at bay), the market has pushed back its timeline for an update on the Fed’s taper plans, with many seeing the Fed’s Jackson Hole conclave as premature.
Powell’s full prepared remarks are below (pdf link)
Wed, 07/14/2021 – 11:55