It’s that time of the year again: Federal Reserve Chair Janet Yellen is scheduled to appear before Congress Tuesday and Wednesday to discuss the state of the economy and the Fed’s evolving stance on monetary policy prescriptions.
The testimony comes over a particularly sensitive two-day stretch, sandwiched between the Fed’s interest rate-setting meeting last week and a referendum in the U.K. on Thursday over whether the country should remain in the EU, or opt to leave — a so-called Brexit — that Yellen has said could be a potentially market-swaying event that “could have consequences in turn for the U.S. economic outlook.”
With the Brexit vote in mind, along with a disconcertingly poor May jobs report, Yellen and her Fed colleagues opted to keep rates steady last week, as markets expected. What really grabbed investors’ attention were the Fed’s newly revised economic projections, which showed the U.S. economy growing more slowly than expected over the next two years.
You can watch Yellen’s testimony Tuesday at the Senate Committee on Banking, Housing, and Urban Affairs website here.
Yellen is likely to be grilled over that evolving view of the American economy in her appearances before the Senate Tuesday and the House of Representatives Wednesday. And, as is usually the case in the twice-yearly testimonies, members of Congress will use the occasion to score political points, with Republicans decrying the Fed’s financial regulations and progressive Democrats demanding that the Fed get tougher on banks.
Other topics likely to be discussed include recent revelations of hacking attempts and a heist at the Fed, the possibility of dipping into negative interest rates, and the Fed’s recent decision to rate five major banks’ resolution plans as “not credible.” Investors will listen closely for any hints as to whether the Fed may warm to raising interest rates in July.