Jerome Powell, the Chairman of the Federal Reserve is going to testify to the Senate Banking Committee and The House of Financial Services. He would deliver his report on Semiannual Monetary Policy to the Congress. Then, he would let the lawmakers ask him questions. This might probably lead to tension as some lawmakers are not satisfied with the recent rate hike the Fed decided. Based on the report preview, the Fed chair plans to bring down annual inflation to the target of 2%.
Apparently, the plan arrives during a deep fiscal unrest among lawmakers debating over the debt ceiling. Republicans, as the party controlling the House, argued that they will not increase the limit until federal spending is cut. Meanwhile, the White House declined to negotiate. However, the Congress used a guideline from the president’s budget in order to shape spending priorities for the next few years. This becomes the reason why Wall Street investors follow how this debate goes to predict the market.
The senior U.S. economist at Vanguard, Josh Hirt delivered the argument. He believed that they were stuck in the messy middle. It means that activity weakens in the major part of interest rate-sensitive sectors in the economy. Although, some core areas show resilience. Right now, everyone is in the era where the rates’ impact does not fully work through economy.
Furthermore, Biden announced that his budget will help offset increasing costs in certain sectors like Medicare, Social Security and health care in annual. This goal might require increasing taxes on the ultra-wealthy. The president mentioned the ‘billionaire’ tax last year. The rest of the increase of tax would be on capital gains and corporate stock buybacks.