Fed: Jerome Powell signals continuity – MUFG

There were no dramatic comments from Jerome Powell in his Senate confirmation hearing to alter the perception of him as being more of the same in following Janet Yellen into the Chair of the Fed’s Board of Governors, according to Derek Halpenny, European Head of GMR at MUFG.

Key Quotes

“He stated it was time to normalise rates and the Fed’s balance sheet but also stressed the fact that the US economy was not overheating and that the labour market had scope to tighten further. He did also though acknowledge, just as Yellen has, that low inflation recently was a “surprise”.” 

“The minutes from the FOMC last week suggest the debate over why inflation is so low is intensifying with more members potentially seeing more than just transitory factors at play. We heard nothing to question our view that the FOMC under Powell will support a period of pause in order to assess inflationary factors in the US. A weaker dollar in H1 2018 remains a likely consequence of that.”