All Eyes on US Congress as Fed Chair Powell Prepares for First Comments Since Ukraine War Began

Jerome Powell. Source: video screenshot, Yahoo Finance / YouTube

 

US Federal Reserve chairman Jerome Powell is scheduled to testify earlier than Congress on Wednesday and Thursday this week, with market contributors in each crypto and conventional markets now eagerly awaiting his first feedback on the economic system after the struggle in Ukraine broke out.

The testimony, which shall be delivered earlier than the House of Representatives’ Financial Services Committee, marks the primary event in almost 5 weeks that the general public will get to listen to the Fed communicate concerning the economic system.

Since his final look, when Powell spoke primarily about how the Fed was working to get inflation down within the US, the financial outlook for the world has grown considerably extra advanced. Among the elements complicating the image are heavy sanctions positioned on Russia, a collapse of the Russian rouble, and oil costs which have surged to over USD 110 per barrel.

“Inflation has continued longer than we thought,” and we’ll use our instruments to make sure increased inflation “doesn’t turn into entrenched,” was among the many issues Powell mentioned final time he spoke publicly concerning the Fed coverage.

In addition to the struggle in Ukraine, the COVID-19 measures have additionally been eased in each Europe and the US since Powell’s final look – a improvement that’s anticipated to spice up financial exercise.

The large query the market has for Powell now could be to what extent the fallout from the struggle will have an effect on the Fed’s deliberate tightening of financial coverage. The subsequent scheduled rate of interest adjustment within the US is ready for March 16, and it’s anticipated that the central financial institution will elevate charges by 0.25%.

Speaking at an internet seminar on Tuesday, Atlanta Fed President Raphael Bostic mentioned that the Fed’s job now has turn into harder.

“Our onerous job simply bought a complete lot more durable. Energy is altering quite a bit. The means of individuals and items to maneuver via Europe – seems to be like that’s going to alter quite a bit. That has implications for provide chains and a complete host of issues. There is quite a bit we now have to determine,” Bostic mentioned, per Reuters.

Since the start of the struggle in Ukraine, yields on US 2-Year Treasury bonds have fallen from 1.6% to 1.36% as of Wednesday at 10:00 UTC. The falling bond yields might additional complicate the Fed’s effort to get market charges increased so as to counter inflation.

Further, it’s feared that an surroundings of rising rates of interest mixed with increased shopper costs, and specifically increased power costs, might push the economic system into what’s recognized as stagflation – a mixture of financial stagnation and inflation.

“We’re getting into a interval of stagflation. The query is, does [Powell] focus extra on the ‘stag’ or does he focus extra on the ‘flation’,” Peter Boockvar, chief funding officer at Bleakley Advisory Group, told CNBC in a remark yesterday.

At 10:29 UTC, bitcoin (BTC) stood at USD 44,156, up 2.3% for the previous 24 hours and 15% for the previous 7 days.

Powell’s testimony is anticipated to start at 10:00 ET (15:00 UTC) right now.

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Learn extra:
– Crypto Market Braces for Volatile Week Ahead of Fed’s ‘Emergency Meeting’
– Bitcoin Rises with All Eyes on Ukraine, Fed’s Next Move

– As Inflation Is Here to Stay, Bitcoin, Ethereum, and Gold Investors Will Win, But Brace for Volatility – BitMEX
– How Raising Interest Rates Curbs Inflation – and What Could Possibly Go Wrong

– Potential Fallout From War in Ukraine May Be Priced Into Crypto Market – Observers
– Traditional Markets, Crypto Trim Losses, Moscow Exchange Won’t Open Today as Kyiv and Moscow Start Talks


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