Fed: Powell seemed a bit more dovish – Deutsche Bank

Analysts at Deutsche Bank suggest that the Fed Chair Powell seemed a bit more dovish this time speaking in front of the Senate as he reiterated the need for gradual increase in rates over time, but added “there’s no evidence the economy is currently over heating”.

Key Quotes

“On wage growth, he said “we don’t see any strong evidence yet of a decisive move up in wages” and does not see a tightening in labour market causing wages to hit “a point of acceleration”. Elsewhere, he noted recent tax cuts will add “meaningfully to growth for at least the next couple of years…but how much it will add to longer run growth is highly uncertain”. Finally he noted “…the tariff’s approach is not the best approach, the best approach is to deal directly with the people who are directly affected…” Following on, the Fed’s Dudley said “protectionism is not the answer” as tariffs “often backfire” and hurt workers. He noted “trade barriers are an expensive way to preserve jobs in less competitive or declining industries” and that “raising trade barriers would risk setting off a trade war…”