With all eyes on today’s testimony, watching for strawman hawkishness ahead of the FOMC meeting, Fed chair Powell’s prepared remarks offer some signal that he is in fact just as dovish.
Powell TL/DR: The economic news is terrible enough to send the S&P back over 3,000
Powell begins by noting that uncertainties since June’s FOMC continue to dim their outlook, which is odd because macro data has surprised to the upside since then…
Federal Reserve Chairman Jerome Powell says:
Baseline case is still for solid growth and for labor market to stay strong but notes uncertainties have increased in recent months
Notes many officials at June FOMC saw stronger case for somewhat easier monetary policy
Powell points to risk weak inflation may prove more persistent, says inflation pressures remain muted
Says housing investment and manufacturing look to have dipped again in 2q
Powell also notes that “growth in business investment seems to have slowed notably” … which is great news as investment in stock buybacks has accelerated notably.
The punchline is that Powell warns that “a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit. And there is a risk that weak inflation will be even more persistent than we currently anticipate.”
Ahead of the release, July rate-cut odds had slid to 92.5% from 100% (with zero percent chance now of a 50bps cut).
Powell comments in text of testimony prepared for delivery to House Financial Services Committee, which is scheduled to start at 10 a.m. in Washington
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Full Prepared Remarks below (link to statement)
via ZeroHedge News https://ift.tt/30pE98L Tyler Durden