WASHINGTON–Credit unions and other market-watchers will be paying attention to congressional testimony by Federal Reserve Chairman Jay Powell this week to see whether he departs in any way from his previously stated views on inflation.
Powell will testify separately before the House and the Senate this week as part of the Fed’s semi-annual report to Congress.
While the Fed has consistently played down the threat of inflation, saying recent price increases in some areas are just a temporary response to the pandemic, as CUToday.info reported here,
there was new discussion around inflation at the most recent meeting of the Federal Open Markets Committee. Credit unions have been particularly interested in that discussion as it is fundamental to the future direction of rates.
NAFCU’s chief economist, Curt Long, is among those who believe inflation’s growth is going to be moderate.
“I think right now the data is pretty clear and I don’t think we’re seeing yet the kinds of broad-based pricing increases people are talking about,” said Long, noting where higher inflation has been seen localized and in areas of supply constraints, such as used cars, lumber and semi-conductors. “Some of that has abated a bit.”
Sticking to ‘Party Line’
Long reminded the Fed’s Powell has tended to “speak the party line” and will likely tell Congress recent inflation blips are a “transitory thing” and “nothing to be concerned about.”
Noting the federal government will be releasing additional data today, Long added, “I think what people are going to be watching for is rent. Rental prices have not increased that much, especially compared to house prices. But one might lead to another. With rent being a sizeable proportion of the consumption basket for many households, increases in that line item could make a big difference for some.”