Fed Yellen’s testimony: What to expect? - TDS

Analysts at TDS provide a sneak peek into markets’ expectations on the upcoming Fed Chair Yellen’s semi-annual testimony on the monetary policy before the Senate Banking Committee and House Financial Services Committee on February 14 and 15, respectively.

Her testimony is scheduled to begin at 10 AM ET each day with prepared remarks, followed by Q&A.

Key Quotes:

“At her semi-annual Monetary Policy (née HumphreyHawkins) testimony next week, Fed Chair Janet Yellen is unlikely to veer far from the stance that the Fed should be able to hike “a few” more times this year. We don’t expect any explicit discussion of the likely timing of future rate hikes or changes to the balance sheet policy.”

“Congressional questioning may focus more on the Fed’s supervisory role and proposed changes to the regulatory environment than on monetary policy. Yellen may find herself defending the Fed’s independence, particularly before the House. That said, questions on the Fed’s assessment of the outlook and on how the Fed might react to fiscal stimulus are likely as well.”

“Humphrey-Hawkins is not typically a forum for changing communication about Fed policy. Barring something unexpected, Yellen’s tone will be upbeat on the outlook and future rate hikes, giving support to June rate hike probabilities (currently at 78%) and the USD.”