How To Promote Maximum Employment and Stable Prices
That’s the Federal Reserve’s dual mandate.
If all goes according to trend, the Consumer Price Index for June will show the rate of inflation continues to ease.The Bureau of Labor Statistics will release that data at 8:30 a.m. ET on Thursday.
On Tuesday and Wednesday, Federal Reserve Chair Jerome Powell will testify to the US Senate and the House of Representatives on economic conditions and interest rates.
Members of Congress will try to bring the heat. But Powell will likely stick to variations of his new theme, that we’ve made progress on inflation and that the labor market is cooling.
That seems fairly obvious based on an accumulation of incoming data.
There is no question the unemployment rate is rising and payroll growth is slowing.
And the Fed’s preferred measure of inflation – the core reading on the Personal Consumption Expenditures Price Index – is trending in the right direction as well.
Powell will deliver prepared remarks around the Fed’s Semiannual Monetary Policy Report on both days of legally required Congressional testimony.
Senators and Representatives on both sides of the political aisle will attempt to corner the Fed Chair into their policy preferences with their questions.
That should make for good sport. And Powell may even offer a little bit of light on the rate-cut timeline.
But inflation politics is not likely to be particularly edifying for investors, traders, and speculators.
Happily, second quarter earnings reporting season starts this week too.
Delta Air Lines $DAL and PepsiCo $PEP will report on Thursday, and Bank of New York Mellon $BNY, Citigroup $C, JPMorgan Chase & Co. $JPM, and Wells Fargo $WFC will report on Friday.
But the big number of the week is still CPI.
The consensus expects to see a 0.1 percent month-over-month increase at the headline level in June following a flat reading in May.
The year-over-year print is expected to be 3.1 percent, down from 3.3 percent in May.
The consensus forecast is for a 0.2 percent increase at the core level. Year-over-year core CPI is expected to come in at 3.5 percent.
The Fed’s target inflation rate is 2 percent.
