Fed Chair Powell heads to the Hill — What to know in markets Wednesday

Federal Reserve Chairman Jerome Powell will head to Capitol Hill Wednesday to kick off two days of testimony before Congress. At 11 a.m. ET, Powell will go before the Joint Economic Committee to discuss the economic outlook.

Though Powell has testified on two separate occasions this year in front of Congress, this is the first time he will appear before the Joint Economic Committee. It is chaired by Utah Senator Mike Lee and is comprised of 10 members of the House of Representatives and 10 members of the Senate.

WASHINGTON, USA - FEBRUARY 27: Chairman of the Federal Reserve Jerome Powell testifies before the House Financial Services Committee on the Semiannual Monetary Policy Report to Congress at the U.S. Capitol in Washington, United States on February 27, 2018. (Photo by Samuel Corum/Anadolu Agency/Getty Images)

Investors will look for clues on the rate decision in December, comments on the effects of the phase one trade deal and the handling of the Fed’s balance sheet. Capital Economics expects that Powell will likely reinforce the Fed’s wait-and-see message when he testifies on the Hill.

Economic data

Ahead of Powell’s testimony, investors will get the latest read on inflation when the the Bureau of Labor Statistics will release October’s consumer price index (CPI) report. Excluding volatile food and energy, October’s CPI is expected to have risen 0.2% from September, according to economists polled by Bloomberg.

While core personal consumption expenditures, the Fed’s preferred measure of inflation, has yet to meet the central bank’s 2% inflation target, CPI has been comfortably above that target for the past four months.

“In his latest press conference, Fed Chair Powell noted that it would likely take a significant rise in inflation before the Fed considers hiking rates,” Credit Suisse wrote in a note to clients Thursday. “The FOMC is effectively aiming for an overshoot of the Fed’s 2.0% target, meaning the Fed is likely to be less sensitive than usual to upcoming CPI reports.”

Earnings seasons has slowed. However notable earnings reports scheduled for Wednesday include Luckin Coffee (LK) before the market open and Cisco (CSCO) after the market close.

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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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