Federal Reserve
Chair Janet Yellen is expected to face pointed questions this week from
U.S. lawmakers aimed at revealing details about the Fed's timing on
interest rate hikes, as well as fresh scrutiny about transparency at the
central bank.
Yellen will likely give away
little in her prepared testimony for the Senate Banking Committee on
Tuesday, and the House Financial Services Committee on Wednesday.
But her answers to lawmakers' questions will be parsed for insight into the her thinking about issues like persistently weak inflation, stagnant wage growth and whether she still feels the nation's falling unemployment rate disguises lingering ills in the labor market.
Yellen's appearance before the Senate will be a key test of her ability to navigate the new Republican-controlled Congress while steering the Fed to a historic change in policy expected later this year.
The Fed has not raised interest rates since 2006, and for the last seven years has expanded the boundaries of central bank activism with more than $3 trillion in asset purchases and near-zero interest rates.
Conservatives within the central bank and many Republicans in Congress argue that the Fed under Yellen, an Obama appointee with strongly stated concerns about the damage the financial crisis did to working families, is out of step with improvements in the U.S. economy, and lawmakers will likely press for details on when policy will change.
The last two Fed policy statements have said the central bank will remain patient when deciding to move short-term rates higher. Lawmakers are expected to nudge Yellen on when "patient" will be dropped.
"We suspect that she will characterize the risks around those choices in a way that suggests a greater likelihood that the Committee will reiterate the "patient" language in March and that "liftoff" in June is not the most likely outcome," Nomura economists said in a note.
During Yellen's last appearance in front of the House, several lawmakers criticized the Fed for its lack of transparency.
But her answers to lawmakers' questions will be parsed for insight into the her thinking about issues like persistently weak inflation, stagnant wage growth and whether she still feels the nation's falling unemployment rate disguises lingering ills in the labor market.
Yellen's appearance before the Senate will be a key test of her ability to navigate the new Republican-controlled Congress while steering the Fed to a historic change in policy expected later this year.
The Fed has not raised interest rates since 2006, and for the last seven years has expanded the boundaries of central bank activism with more than $3 trillion in asset purchases and near-zero interest rates.
Conservatives within the central bank and many Republicans in Congress argue that the Fed under Yellen, an Obama appointee with strongly stated concerns about the damage the financial crisis did to working families, is out of step with improvements in the U.S. economy, and lawmakers will likely press for details on when policy will change.
The last two Fed policy statements have said the central bank will remain patient when deciding to move short-term rates higher. Lawmakers are expected to nudge Yellen on when "patient" will be dropped.
"We suspect that she will characterize the risks around those choices in a way that suggests a greater likelihood that the Committee will reiterate the "patient" language in March and that "liftoff" in June is not the most likely outcome," Nomura economists said in a note.
During Yellen's last appearance in front of the House, several lawmakers criticized the Fed for its lack of transparency.
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