Fed focuses message on inflation control and banking sector stability, but without concrete proposals

Fed marzo 2022 2

Bankinter| In his appearance before Congress, Powell maintained the tone and vagueness of his message. Congress has focused most of its questions on banking regulation. Meanwhile, Powell focused his message on inflation control, but without specifying the future.

Analysis team’s view: The Fed governor reinforced the stability of the banking sector. But, he did not specify the future of regulation. Powell expects to receive a proposal during the summer. However, its approval and implementation is a delayed process that should not impact the current economic situation. On the monetary policy side, Powell reinforced the commitment to inflation and the 2% target (“nothing in my tenure will happen to make me reconsider it”). Regarding the June meeting, the terminal rate and the pace of hikes are different issues for the Fed. Therefore, holding rates at the last meeting, but expecting further hikes in the future was a consistent move. Thus, the central bank can assess the future of monetary policy with more data. Powell will appear before the Senate today.

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