Powell Faces a Delicate Balance in Testimony to Congress
Fed chair will need to weigh inflation data against worries about a trade war.
He’s been there before.
Photographer: Andrew Harrer/Bloomberg
The higher U.S. inflation numbers released Thursday will add weight to the Federal Reserve’s policy deliberations when the Open Market Committee meets on July 31 and Aug. 1. The price data, along with continued signs of a solid domestic economy, would encourage Fed officials to signal a rate hike at the following FOMC meeting, in September, and leave open the possibility of a fourth increase this year. Yet central bankers will need to also take into account the risks to business investment from rising trade tensions at a time of more fragile global economic momentum.
The old Fed, led by Chair Janet Yellen, would have erred on the side of caution and postponed the next interest rate hike until December. The outlook is less clear under the leadership of the new chairman, Jerome Powell. This uncertainty also makes Powell’s congressional testimony next week even more worthy of attention.