Highlights from the prepared testimony from Federal Reserve Chairman Jerome Powell at Humphrey Hawkins
- Some headwinds facing the US economy are now tailwinds
- Financial conditions accommodative despite volatility
- Must strike balance to avoid overheat and to lift inflation
- FOMC sees risks roughly balanced, monitoring inflation
- Wages should increase at a faster pace
- US economic outlook strong, inflation to rise to 2%
- FOMC consults policy rules and he finds them helpful
- Fiscal policy more stimulative, foreign demand firmer
- Robust job market to support income and spending
- Recent wage increases likely have been dampened by weak productivity growth. Last year's business investments should begin to lift productivity
- Full text
The dollar is higher on the knee-jerk despite some soft economic data coming with the headlines. Powell is generally optimistic and upbeat but that's akin to what was expected.
This is the key line:
"While many factors shape the economic outlook, some of the headwinds the U.S. economy faced in previous years have turned into tailwinds: In particular, fiscal policy has become more stimulative and foreign demand for U.S. exports is on a firmer trajectory," he said.
That's interesting because at the same time as his testimony, goods trade balance numbers missed expectations. Exports fell 2.2%. The goods deficit is at $74.4B compared to $68.2B a year ago.
Overall, I don't see anything that sends a signal about a faster or slower pace of hikes.
