Federal Reserve submits monetary policy report to Congress, Powell’s testimony this week

The Federal Reserve in the Monetary Policy Report submitted to the Congress indicated that more interest rate increases would be necessary to bring back price stability. The Federal Reserve Act requires the Federal Reserve Board to submit written reports to Congress containing discussions of “the conduct of monetary policy and economic developments and prospects for the future.” This report – called the Monetary Policy Report – is submitted semiannually to the Senate Committee along with testimony from the Federal Reserve Board Chair.

On Tuesday, March 7, at 10 AM, Powell will give a testimony on ‘The Semiannual Monetary Policy Report’ to Congress at the Hart Senate Office Building 216.

On March 8, Wednesday at 10 a.m. ET., Federal Reserve Chair Jerome Powell will appear before the House Financial Services Committee at 2128 Rayburn House Office Building, regarding the central bank’s semiannual monetary policy report.

Also Read: Jim Cramer’s stock picks: Investors can now bet on or against them through two new funds

The Federal Open Market Committee (FOMC) is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates is what the Fed officials reported in the Monetary Policy Report.

Although inflation has slowed since the middle of last year as supply bottlenecks eased and energy prices declined, it remains well above the Federal Open Market Committee’s (FOMC) objective of 2 percent. The labor market remains extremely tight, with robust job gains, the unemployment rate at historically low levels, and nominal wage growth slowing but still elevated. Real gross domestic product (GDP) growth picked up in the second half of 2022, although the underlying momentum in the economy likely remains subdued. Bringing inflation back to 2 percent will likely require a period of belowtrend growth and some softening of labor market conditions.

In response to high inflation, the FOMC continued to rapidly increase interest rates and reduce its securities holdings. The Committee has raised the target range for the federal funds rate a further 3 percentage points since June, bringing the range to 4½ to 4¾ percent, and indicated that it anticipates that ongoing increases in the target range will be appropriate. The Federal Reserve has also reduced its holdings of Treasury securities and agency mortgage-backed securities by about $500 billion since June, further tightening financial conditions.

The Federal Reserve is acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials. The Committee is strongly committed to returning inflation to its 2 percent objective, says the report.