Federal Reserve Chairman Jerome Powell is expected to face lawmakers Tuesday and explain that since the economy is growing at a healthy clip, inflation has accelerated. However, in written testimony, he remains firm that inflation’s 13-year high is only temporary. Powell feels as issues like higher gas prices and increased consumer spending lessen, inflation will drop back down. While the nation awaits those remarks, gold prices edged higher on Tuesday. Kitco News reports some investors view gold as a hedge against higher inflation that could follow stimulus measures.
Fox Business/Megan Henney
Fed’s Powell faces rate-hike questions on Capitol Hill amid recent inflation surge
Federal Reserve Chairman Jerome Powell is slated to tell lawmakers Tuesday on Capitol Hill that while inflation has risen “noticeably” in recent months, the U.S. economy has shown “sustained improvement” from the coronavirus pandemic.
Powell, in prepared testimony for the Select Subcommittee on the Coronavirus Crisis, will reiterate to lawmakers that an uptick in consumer prices is due in part to a rebound in spending as the economy reopens.
“As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal,” Powell will say.
The Fed head also painted a brighter economic outlook, citing widespread vaccinations and unprecedented levels of monetary and policy support. Still, he will warn that risks remain, including the slowing pace of vaccinations and new strains of COVID-19.
“We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery,” he will say.
You can read the full story, here.
Gold firms on dollar retreat; Powell testimony awaited
Gold prices edged higher on Tuesday, as a pullback in the dollar lifted demand for the safe-haven metal, ahead of U.S. Federal Reserve Chairman Jerome Powell’s testimony to Congress later in the day.
Spot gold was up 0.1% at $1,784.83 per ounce, as of 0054 GMT.
U.S. gold futures gained 0.1% at $1,783.90 per ounce.
The dollar index retreated from two-month highs against its rivals, making gold less expensive for holders of other currencies.
The benchmark 10-year yield held below 1.50%, reducing the opportunity cost of holding non-interest-bearing gold.
The U.S. economy continues to show “sustained improvement” from the impact of the COVID-19 pandemic and ongoing job market gains, but inflation has “increased notably in recent months,” Powell said in prepared testimony for a congressional hearing on Tuesday.
Some investors view gold as a hedge against higher inflation that could follow stimulus measures.
Keep reading, here.
CNN Business/Julia Horowitz
Government spending ‘fatigue’ is a risk worth watching
As the global recovery takes hold, governments around the world will be increasingly tempted to stop throwing so much cash at the economy. Investors could see that as a big mistake.
What’s happening: President Joe Biden’s infrastructure proposal — part of $4 trillion in potential spending — is a priority in Washington this week. But there are still deep divisions that could stymy its passage, and some on Wall Street are starting to worry that the end result will be nowhere near as ambitious as they’d previously hoped.
“We got a sense of Congressional spending fatigue when we visited Washington a few weeks back,” Tobias Levkovich, Citi’s chief US equity strategist, told clients this week.
His team now thinks that $4 trillion to $4.5 trillion in new spending plans “appear likely to be scaled back” to less than $3 trillion, reducing the boost to the country’s economic output.
Read the full story, here.