16 Jul 2013
Flash: Speculation runs rampant ahead of Fed testimony – Deutsche Bank
FXstreet.com (New York) - With the Chinese data out of the way, the other highlight this week is Bernanke’s semiannual testimony before the House Financial services Committee (Wednesday) and Senate Banking Committee (Thursday), note Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
Over the course of the past two months, markets have been left wondering which way the Fed Chairman stands in terms of monetary policy. Will we get the more hawkish Bernanke that spoke in the Q&A session of the May JEC who referred to potential QE tapering over the next few months? Or will we get a repeat of the dovish Bernanke who assured the NBER last week that "highly accommodative monetary policy" will continue "for the foreseeable future", that the Fed would “push back” if financial conditions tightened too much, and that it was too early to say whether the US had weathered the fiscal restraint in Washington?
“For the record, our US economists expect Bernanke to be less dovish this week, at least compared to his recent remarks at the NBER conference, given that he will be speaking on behalf of the FOMC. He will likely reiterate the Fed’s desire to begin tapering asset purchases sometime this year and highlight the progress made in the labor market since the Fed embarked on QE3 last September.”
Over the course of the past two months, markets have been left wondering which way the Fed Chairman stands in terms of monetary policy. Will we get the more hawkish Bernanke that spoke in the Q&A session of the May JEC who referred to potential QE tapering over the next few months? Or will we get a repeat of the dovish Bernanke who assured the NBER last week that "highly accommodative monetary policy" will continue "for the foreseeable future", that the Fed would “push back” if financial conditions tightened too much, and that it was too early to say whether the US had weathered the fiscal restraint in Washington?
“For the record, our US economists expect Bernanke to be less dovish this week, at least compared to his recent remarks at the NBER conference, given that he will be speaking on behalf of the FOMC. He will likely reiterate the Fed’s desire to begin tapering asset purchases sometime this year and highlight the progress made in the labor market since the Fed embarked on QE3 last September.”