What Jay Powell Said Today On Capitol Hill (And Why It Matters)

|July 10, 2024
The United States of America capitol building on a sunny day.

We can remember it like it was yesterday.

Our former editor told us time and again that interest rates act like the hormones of the economy. That they can, oftentimes, be the single most important driver of the economy.

We rolled our eyes and begrudgingly read up on the latest goings-on of the Fed.

We combed through the drier-than-dust official remarks of Bernanke… then Yellen… and now Powell.

We studied the markets’ reaction to those words. And in time, we came to understand…

Our former editor (who we now consider both a good friend and mentor) was right.

The actions of Jay Powell and his team hold more sway over our wallets than any presidential administration.

After a series of interest rate hikes that brought borrowing costs to 21-year highs, a growing number of Americans agree.

It should’ve been our beleaguered Fed Chief getting grilled by George Stephanopoulos on Friday night. Especially considering inflation has gotten so bad that Dollar Tree (DLTR) is raising prices to as high as $7.

Instead, Mr. Powell was grilled this morning by the House Financial Services Committee. Like the rest of us, they wanted to know what the Fed’s plan is for cutting rates.

Chiefly, when will the Fed actually get started on that initiative?

Our always infallible House representatives also took a few pot shots at Powell for his 2022 statement that inflation would be temporary.

As usual, the Fed Chief kept his cool under pressure. He stuck to his line from Tuesday’s session before the Senate…

Reducing policy restraint too late or too little could unduly weaken economic activity and employment.

In other words, rates will stay put until the Fed says otherwise.

Still, the markets bounced right along with Powell’s testimony, rising during the first 15 minutes of the session, then dropping as the realization crept in that there was nothing new to see here.

The good news?

We’re just 20 days out from the next FOMC meeting.

Which means anyone still hungry for another nothingburger from the Fed won’t have to wait long.

In the meantime, markets seem content to keep doing what they are doing.

In spite of still rampant (but cooling) inflation and no firm start date for that first rate cut… we keep hitting new all-time high after new all-time high. Though the stretches in between those milestones have come with plenty of volatility.

As we said last week, these are prosperous times for folks with strong stomachs.

Alex Moschina
Alex Moschina

Alex Moschina is the associate publisher of Manward Press. A gifted writer, editor and financial researcher, Alex’s career in publishing began more than a decade ago when he worked at one of the world’s leading providers of academic research and reference materials. Alex first cut his teeth in the realm of investing when he joined the team at White Cap Research in 2010. There he was charged with covering emerging market trends and investment opportunities. A stint as senior managing editor and editorial director at the prestigious Oxford Club followed. A frequent speaker at conferences and events, Alex has led educational workshops across the U.S. and Canada.