Markets are awaiting today’s testimony of Janet Yellen, with some analysts expecting Fed Chair to be asked about Trump’s policies. What comments can we expect from Janet Yellen on Trump Stimulus?
17 November, AtoZForex – Janet Yellen, Fed’s Chair, will give testimony before the Joint Economic Committee of Congress. Although Yellen was scheduled to testify on the economy, she is now anticipated to get questions regarding the Donald Trump’s plans to reduce taxes and to initiate an infrastructure spending program in 2017. It is likely that the policies of Fed will be discussed as well. Tom Simons, a chief money market economist at Jefferies, commented that:
“I’d like to hear a clear signal that we’re going to get a rate hike in December and the outlook. But things are going to be so politically charged that it’s hard to know if we’re going to get any useful information out of it. I think Republicans will be galvanized by the win and the fact they are at the helm now”.
Janet Yellen on Trump Stimulus: markets’ expectations
A chief global analyst at Horizon Investments, Greg Valliere, anticipates Janet Yellen to speak positively about the fiscal spending. As the Fed officials have already been mentioning that the monetary policy alone can’t boost the economy. Greg Valliere also expects that Yellen will speak about the Fed. According to the analyst, she would attempt to keep aside from any legislation that could restrain the authority of the Fed. He believes the House will push forward something, at least an audit. Then the Congress would be able to review the Fed’s policy decisions.
Despite the expectations of some market participants that Janet Yellen will be questioned about the Fed’s policy, it is unlikely she will go deep into it. Besides expecting comments from Janet Yellen on Trump Stimulus, there are some market players that expect her to be asked whether she has considered resigning, following the victory of Trump. Furthermore, the committee is anticipated to dedicate a substantial part of the time to infrastructure spending, with Jellen being pressed on aspects of the Trump tax plan.
Will Donald Trump align himself with people wishing to restrain Fed’s authority?
Since the election of Donald Trump, interest rates have been increasing as markets started to believe this program will boost the economy. The market has also been focused on the policies of Trump and who he would select for his cabinet. Greg Valliere stated that:
“I think the real concern is whether Trump aligns himself with people who want to curb the Fed’s authority. If there’s one appointment that would send a chill through the Fed it would be Jeb Hensarling, and I think that would send an alarm through the Federal Reserve and maybe be viewed by concern in the financial markets.”
In addition to the Yellen’s testimony, the two other Fed’s officials will be speaking today. One of them is William Dudley, New York Fed President. He will make welcoming remarks at a forum. The other one who will also be speaking at the forum is Lael Brainard.
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