The head of the Federal Reserve Jerome Powell will testify on the Semiannual Monetary Policy Report before the House Financial Services Committee at 17:00 MT time on Tuesday and Wednesday.
Why is that important?
The Federal Reserve Chair may provide some insights into the possible changes to the current monetary policy by the bank and highlight the current risks for the economy. If Mr. Powell positive comments, the USD will rise. Alternatively, the acknowledgment of the negative outlook will weaken the US dollar.
What to expect?
Analysts anticipate Jerome Powell to stick to his words and provide generally upbeat comments. As a potential risk, we expect the Fed Chair to highlight the impact of coronavirus on the global economy. All in all, the Fed has already indicated the steadiness in the interest rates during the previous meeting. Thus, we don’t expect a major turn in the monetary policy stance for now.
Also, the market is awaiting the Fed to announce the changes to the inflation approach during this year. That’s why more clues on whether this shift to dovishness will happen may pull the USD down. The Fed’s future plans concerning its balance sheet will be followed, too.