Fed: Powell to stick to gradual path of policy normalization – Deutsche Bank

Analysts at Deutsche Bank suggest that new Fed Chair Powell’s testimony is at 3pm GMT and he will be speaking on behalf of the FOMC, and DB’s economists fully expect him to reiterate that a “gradual” path of policy normalization remains the order of the day.

Key Quotes

“However, he will also likely discuss emerging upside risks to the growth outlook in the wake of recent fiscal policy changes. In this respect, the minutes of the January 31 FOMC meeting provide a good template for Powell’s prepared remarks. Recall that last week’s minutes indicated that “Most members noted that recent information on inflation along with prospects for a continued solid pace of economic activity provided support for the view that inflation on a 12-month basis would likely move up in 2018 and stabilize around the Committee’s 2% objective in the medium term.”

“In short, Powell will likely convey the message that with an improving growth and labor market outlook, the Fed continues to gain confidence that the inflation side of its dual mandate will soon be met. Outside of this the market will be fascinating to see how he handles his first big public appearance in the new role.”