New Federal Reserve Chairman Jerome Powell is scheduled to give his first views of the economy Tuesday to House Finance Committee. He then will speak to the Senate panel on Thursday.
While Wall Street analysts do not expect much in the way of policy changes from ex-Fed head Janet Yellen, I have to say that’s conflicted thought — hoping for calm.
Why would the Trump Administration push for a change at the Fed to only continue the gradual, incremental rate hikes with blaring sirens signaling the moves six months ahead.
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I believe Powell will not give any definitive thought to a 4th hike in 2018. You man need to pull some teeth to get a comment on three hikes.
The most he will venture to Congress is to take a wait and see attitude.
The thought that businessman Trump and his use of credit throughout his career, would want to see any more tightening of credit — especially when he uses Dow Jones index as the barometer of success of his economic policies — to suppress growth due to academic concerns on inflationary will not tolerated.
A Powell Fed will probably be less collegial than that of Ben Bernanke or Yellen. The new chief will not walk the Yellen tight rope of trying to attain a 2 percent inflation rate. Something Yellen was never able to hit, since she would slam on the brakes anytime the economy warmed.
As I have written numerous times, you cannot have true inflation without wage growth. And since wages were stagnant all during the Yellen years, any fears of something more than price inflation or asset inflation were a straw man argument.
So with all that being said, I don’t think Powell will give much transparency on how many hikes there will be this year. He will return to the Alan Greenspan Fed, where reporters will speculate on future rate hikes based of how many reports were in the Fed chiefs briefcase the day of the announcement.
Well maybe not that archaic, but certainly the Wall Street Journal will not be able to file a 4,000-word story on the Fed’s actions five minutes after the rate decision.