Powell attends the last economic data release in front of Congress! Can small businesses influence the Fed's attitude?

According to the Zhitong Finance and Economics APP, on Tuesday and Wednesday night at 10:00 Beijing time, Powell will deliver semi-annual monetary policy testimonies in the Senate and House of Representatives, facing questions on issues such as monetary policy and bank regulation.

Analysis predicts that Powell will be cautious in his statements, avoiding committing to rate cuts too early. Some members of Congress may criticize the prolonged maintenance of high interest rates, believing that this policy has raised the cost of living.

Investors and economists will closely monitor Powell's speech for clues about the direction of policy.

In terms of economic data, the National Federation of Independent Business (NFIB) small business confidence index for June will be released on Tuesday morning, with forecasts indicating a slight decrease after two consecutive months of growth in April and May.

New Banking Regulations

Powell may also face sharp questions as the United States plans to require Wall Street banks to set aside more capital. It is understood that a proposal issued by U.S. regulatory agencies in July last year requires the eight largest U.S. banks to increase their capital by about 19% to cushion financial shocks. In March this year, Powell stated that he expects the proposal to undergo "broad and significant changes."

Republicans, including House Financial Services Committee Chairman Patrick McHenry, have criticized the initial plan. In September last year, McHenry and other Republican lawmakers urged regulatory agencies to withdraw the proposal, citing "fatal flaws" that could pose risks to the financial system.

Powell has not revealed whether the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency will abandon the initial plan. However, Federal Reserve officials recently presented a 3-page document to other U.S. regulatory agencies listing potential modifications to the reform plan that would significantly ease the burden on large banks.

Senator Elizabeth Warren, a member of the Senate Banking Committee, wrote to Powell last week criticizing his private meetings with bank executives and accusing Powell of giving them too much influence over Federal Reserve policy.

The Federal Reserve responded that it had received the letter and plans to respond, and the hearing will also hear some comments from Federal Reserve Vice Chairman for Supervision Randal Quarles and Federal Reserve Governor Michelle Bowman.

Powell reiterated that the Federal Reserve does not consider political factors when formulating policy.

Last week, Powell said, "I do think that support for the independence of the Fed is very high, and that's important for Congress, both parties, leaders, and most people. So I'm concerned about whether we can do our job."

High-Interest Rate Policy Faces Congressional Pressure

Although the Federal Reserve operates independently and is not influenced by political pressure, this testimony provides an opportunity for members of Congress to influence Federal Reserve policy decisions.

Some members of Congress criticize the Federal Reserve's practice of maintaining high interest rates to combat inflation, believing that this raises the cost of living for the public. Powell may face pressure to lower rates, especially from Democratic senators like Elizabeth Warren.

Massachusetts Senator Elizabeth Warren has been critical of the Federal Reserve's rate hikes from the beginning and has had disputes with Powell in the past on the issue of high interest rates Last month, Warren and Democratic Senator Jacky Rosen of Nevada urged Powell to lower interest rates in a letter. Warren pointed out in the letter that raising rates increased the borrowing costs of mortgages, damaging Americans' ability to buy homes. High interest rates also drive housing-related inflation, lowering rates will reduce the costs of renting, buying, and building homes, thereby reducing Americans' monthly expenses