In testimony that was ostensibly intended to discuss the Fed's most recent monetary policy report, Chair Jerome Powell sent a clear message to markets on Tuesday when he suggested that the central bank is in no rush to raise interest rates, that it would consider an early halt to its balance sheet wind-down if confronted with slowing growth, that the central bank would be keeping a close eye on inflationary pressures and that - much to Alexandria Ocasio-Cortez's chagrin - Modern Monetary Theory, which some "Democratic Socialists" say could be used to finance immense deficit spending in perpetuity - is "just wrong."
In response to questions from members of the Senate Banking Committee, Powell commented on everything from the Fed's role in combating income inequality, to why the Fed doesn't do a better job of policing banking mergers, to the economic impact of the opioid crisis and why the Fed still cares about the budget deficit. And in an indication of just how closely Powell hewed to his stance from the Fed's January meeting, the market's reaction was mostly muted, though stocks trended lower after his remarks after tracing a "quad top" at the critical resistance of 2800.
Now, Powell is set to do it all again Wednesday morning during Pt. 2 of his biannual testimony, which will take place before the House Financial Services Committee. That committee is controlled by Democrats for the first time since he joined the Fed in 2012, and is notably led by two of the sharpest critics of Wall Street in Congress: Committee Chairwoman "Kersone Maxine Waters, and NYC Rep. "Socialist Sandy" Alexandria Ocasio-Cortez.
While day 2 of the chair's Congressional testimony is largely a rehash of Day 1, and with so much else going on, it's unclear whether markets will allot much attention to his remarks, given that the progressive wing of the Democratic Party is firmly in control of the committee, we could see more combative questions about the Fed's complicity in spurring income inequality, and its role in holding Wall Street accountable.
Like he did yesterday, Powell is expected to begin speaking around 10 am.