Powell Faces Policy ‘Combativeness’ in Riskier Post-Yellen World
Bloomberg News on Feb 26, 2018
Because his testimony is happening before the FOMC formally updates its forecast next month, Powell will have to manage the tension between an upgraded economic outlook and a policy path that is still stuck at three hikes from December, said former Fed Governor Laurence Meyer. Firms such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Meyer’s own policy analysis firm predict the central bank will hike four times this year.
“He has to say that the economy is stronger than expected, that fiscal stimulus is adding to that strength, and that unemployment will fall more than expected,” Meyer said. “The tension is that the policy guidance, including in the January minutes, seems out of date and out of line with the evolving outlook.”