In the US, Jerome Powell will make his first appearance as the Fed Chairman since he took over from Janet Yellen earlier this month. He testifies before Congress and his speech will focus on the Fed’s Semi-Annual Monetary Policy Report and the state of the economy, where he will face questions from both houses of the Congress. Powell returns on Thursday, March 1st before a Senate committee.
His testimony comes at a time when investors have been nervous about the pace of the future rate hikes, which have weighed on equity markets globally. Investors are anticipating that Powell will keep the U.S. central bank on a steady course of monetary tightening.
At the latest FOMC policy meeting and the last chaired by Janet Yellen, the FOMC left the door wide open for an interest rate hike in next month’s meeting in March 20-21. Economic data such as the wage increase and the tight labor market raised speculation for a fourth hike within this year instead of three as previously thought in December. The probability for a hike at the upcoming gathering currently rests near 83%, while the forth hike in December currently gathers a probability around 22%.
The Fed said on last Friday it expected economic growth to remain steady and saw no serious risks on the horizon that might pause its planned pace of rate hikes.
Having all these in mind, market participants will be eager to hear Powell’s view on the economy and inflation in order to assess whether the likelihood for a March hike is as elevated as the market implies, and how likely is for the Committee to revise up its future hike path when it meets next.