**********Powell Testimony Outlook: Focus on Inflation Control andFederal Reserveindependence
Federal Reserve Chairman Jerome Powell will attend congressional hearings on Tuesday and Wednesday this week to submit the Fed's semi annual report to Congress. This report and testimony will focus on the efforts of the Federal Reserve in controlling inflation and the current state of the US economy, particularly the performance of inflation rates and the job market.
Current Economic Situation Assessment by the Federal Reserve
The latest report from the Federal Reserve shows that the current inflation level in the United States is "slightly higher" than the Fed's 2% target, while the US job market remains strong and the unemployment rate is low. The main task of the Federal Reserve is to control inflation and maintain stability in the job market. However, Powell's testimony will also reflect the Fed's policy makers entering a "wait-and-see phase" in future interest rate decisions. Previously, the Federal Reserve had cut interest rates three times in a row from September to December last year, aimed at addressing inflationary pressures caused by the overheated economy after the pandemic. However, progress has been disrupted by factors such as Trump's imposition of tariffs.
The impact of Trump's tariff policy and the dilemma of the Federal Reserve
Trump's tariff policies, especially the 25% tax increase on steel and aluminum, have further exacerbated market uncertainty. The Federal Reserve is currently facing a dilemma: whether to continue maintaining a loose monetary policy to cope with possible economic downturns, or to respond to the risk of inflation rising due to tariffs and other policies?
The decisions of the Federal Reserve are not only influenced by economic data, but also by policymakers' concerns about the uncertainty of the Trump administration's trade policies. Powell's testimony may further clarify the Fed's response to Trump's increasing trade barriers.
Musk calls for an audit of the Federal Reserve, challenging its independence
In addition to examining the Federal Reserve's monetary policy, Powell may also face questioning from Trump's allies. Tesla CEO Elon Musk recently called for an audit of the Federal Reserve on social media and suggested appointing former Congressman Ron Paul as the Fed's chairman. Musk's remarks have once again sparked discussions on the independence of the Federal Reserve.
Musk is not the first to publicly question the Federal Reserve. In the past, he has called for a reduction in the Fed's power and stated that its policies should not be subject to political interference. This is consistent with Trump's stance, as he has repeatedly expressed his hope for further interest rate cuts by the Federal Reserve and criticized Powell for keeping interest rates too high.
Powell may defend the independence of the Federal Reserve
The issue of the independence of the Federal Reserve may become a hot topic in this hearing. The Trump administration hopes to be more involved in the decision-making process of the Federal Reserve, especially in executing executive orders. However, Powell consistently defended the independence of the Federal Reserve, believing it to be crucial for maintaining economic stability. He may reiterate at the hearing that the Federal Reserve will not change its decisions due to political pressure.
Editor's viewpoint:
Powell's testimony will greatly affect market expectations for future Federal Reserve monetary policy. As the US economy recovers, Powell will face pressure to find a balance between economic growth and inflation control. At the same time, the challenges posed by the Trump administration and Musk to the independence of the Federal Reserve have intensified market uncertainty. How the Federal Reserve will respond to external pressures and adjust its interest rate policy in the future will have a profound impact on the global economy.
