Federal Reserve Chair Jerome Powell testifies during a U.S. House Oversight and Reform Select Subcommittee hearing on coronavirus crisis, on Capitol Hill in Washington, June 22, 2021.
Graeme Jennings | Pool | Reuters
Federal Reserve Chairman Jerome Powell is tasked this week with convincing Congress that the ultra-easy policies the central bank has followed during the pandemic are still the right ones.
It might not be such an easy task this time around.
While Powell’s parleys with Congress have been notably genial affairs, there’s at least a chance this time around that the questioning could get a little pointed. Some in congressional leadership, particularly on the Republican side, have pushed the Fed to start easing its foot off the policy pedal, specifically pertaining to the at least $120 billion a month in bond purchases still in play.
Powell, then, will have to show that a rapidly improving economy that is contending with its highest inflationary pressures in well over a decade still needs crisis-level policies to pull it through.
“The last time he spoke [on June 22] was in front of the House financial services committee. That was a complete waste of time,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Not many people challenge him. That’s the problem with these testimonies and congressional appearances.”
Indeed, Powell only occasionally faces a tough question or two when appearing on Capitol Hill, as he will Wednesday and Thursday when he delivers his mandated semiannual testimony on the state of monetary policy.
The Fed’s response to the Covid-19 crisis last year, in which it wheeled out an unprecedented set of tools to combat upset in the markets and tumult in the economy, generally received high grades in Congress.
But things are changing.