Today, we had the word from on high as part of the normal, period economic report from Fed Chairman Powell to the Senate Banking Committee. While most of it was couched in the typical hesitation and measured tone, there were some interesting nuggets thrown out to astute observers.
Before we dig in with my own assessment, here are some references if you want to play along at home:
Monetary Policy Report (PDF from Senate Website)
Recorded Testimony (COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS website)
Key Takeaways:
- The Chairman repeated several times that inflation is upon us. In questioning, he asserted that the period calculation is set to adjust shortly to reflect the pandemic period and he expects the windowed rate to rise. He also expects the mid-term rate to rise as well. However, he was careful not to give a prediction of either long term rates or the degree to which they would rise.
- The current rate of deficit spending sits at $6.5 trillion with an additional $1.9 trillion in the pipeline. When asked, the Chairman did not see it as an immediate problem; however, as he did explain that to mitigate its risk in the longer term, future spending would have to be right-sized to alleviate negative impacts.
- In a discussion of crypto and its…
