House Hearing: Jerome Powell and Janet Yellen are set to testify at the US Congress today
Federal Reserve Chairman, Jerome Powell, and Treasury Secretary, Janet Yellen, are set to start their two-day testimony before Congress by 5 pm (Nigerian time), in front of the House Financial Services Committee. They are set to discuss the health of the U.S. economy and the importance of fiscal and monetary stimulus in the recovery from the pandemic.
The U.S. Treasury yields have climbed to their highest levels in more than a year as financial markets have bet on the U.S. economy making a quicker recovery from the damage caused by the pandemic than the central bank currently predicts. The duo is likely to get plenty of questions from a highly politically divided Congress about whether these yields will continue to rise amid fears the economy will overheat.
However, based on extracts from Powell’s prepared testimony, Powell will reiterate the central bank’s plan to support the recovery “for as long as it takes” as the economy is yet to attain its pre-pandemic levels.
Particularly, the labour market remains a concern for the Federal Reserve, with the unemployment rate, and the labour participation rate still below pre-pandemic levels.
Yellen has said repeatedly over the past two months that the U.S. can afford to borrow more with interest rates historically low, and that while the debt level is large the cost to service those obligations is the same as it was in 2007.