Congress to grill Yellen
Federal Reserve Chair Janet Yellen faces two tasks when she delivers her semiannual testimony to Congress starting Tuesday:
As always, she’ll sketch a picture of how she expects the economy to fare in the coming months and how the Fed’s interest rate policy may unfold.
But lawmakers are sure to press her also to spell out how the Fed might react to the ambitious economic program President Donald Trump is preparing to unveil soon. The proposals are expected to include deep tax cuts, stimulus spending, trade actions and deregulation. Investors will be eager to hear whatever Yellen says about them — or doesn’t say.
Analysts caution, though, that Yellen may remain mum in her assessment of the possible consequences of Trump’s plans given that the details remain mostly unknown. Equally unclear is how much of the program will survive through Congress.
“A lot of what the Federal Reserve will do this year will depend on what President Trump and Congress do, and at the moment we have no idea what will emerge from Congress,” said Mark Zandi, chief economist at Moody’s Analytics. “Until there is some clarity about what President Trump and Congress have in mind, I think the Fed is going to be cautious.”
The president is expected to formally present his program in the coming weeks, offering tax cuts for individuals and businesses and increased spending on infrastructure projects and a rollback of government regulations. /