"Double pressure from 'Te Ma'! Tonight, Powell will 'storm' Capitol Hill again, facing a high-pressure hearing

The shadow of Trump's policies and Musk's "difficulties" create a dual pressure, as Federal Reserve Chairman Jerome Powell faces a series of "super difficult" hearings on Capitol Hill.

Powell will appear before the Senate Banking Committee at 10 a.m. local time on Tuesday and before the House Financial Services Committee at the same time on Wednesday for the semiannual monetary policy hearings. According to Bloomberg, both Democratic and Republican lawmakers may pressure Powell during the hearings regarding the Trump administration's policies, covering various aspects from bank regulation to the reduction of diversity, equity, and inclusion (DEI) efforts. Musk took the lead a week ago, suggesting stricter scrutiny of the Federal Reserve.

Analysts believe that as Trump's proposals on trade, taxes, immigration, and regulation bring uncertainty to the U.S. economic outlook, the Federal Reserve's efforts to reduce inflation and maintain a healthy labor market have also become more complicated. Sarah Binder, a senior fellow at the Brookings Institution in Washington, stated:

“The hearings will certainly be very intense. Although the Federal Reserve tends to avoid partisan debates, it cannot isolate itself because it needs public support for its monetary and regulatory policies.”

Monetary Policy and Inflation as Key Points

Since 2021, the Federal Reserve has failed to achieve its 2% inflation target. The employment report in January showed robust performance, with the unemployment rate dropping to 4%, but the inflation rate rose by 2.6% last year, persistent inflation has made it difficult for many Americans to afford daily living expenses.

This is a decisive theme for the 2024 presidential election and a common concern for both parties, which means that inflation and monetary policy may become the focus of lawmakers during this hearing.

Recently, Trump launched a fierce attack on the Federal Reserve after its decision to keep interest rates unchanged, but he seemed to suggest he might temper his stance afterward, stating on February 2 that maintaining stable interest rates was "the right thing to do."

Some analysts pointed out that some Democrats may question Powell about Trump's tariff threats against Canada and Mexico and their potential impact on economic growth and inflation, which could force Powell, who has been cautious about Trump's policies, to clarify his position more explicitly.

French Hill, the new chairman of the House Financial Services Committee, also stated:

“The Federal Reserve's assessment of its inflation target, as well as its inflation analysis and planning, is the most concerning issue for both the Federal Reserve's Constitution Avenue (the location of the Federal Reserve headquarters) and Capitol Hill, and this will be a key point.”

Regulatory Policy and DEI as Controversial Focus

In addition to inflation, analysts believe that Democrats may also demand that the Federal Reserve take clear actions to comply with Trump's executive order to dismantle the federal government's DEI work. Powell previously stated that the Federal Reserve is working to align its practices with the DEI executive order "in a manner consistent with applicable law."

Meanwhile, Maxine Waters, the chief Democrat on the House Financial Services Committee, wrote to the Department of Justice and other agencies last month, stating that Trump's executive order "cannot override the Dodd-Frank Act (which requires the Federal Reserve and several other financial institutions to have diversity and inclusion obligations), federal anti-discrimination laws, or the constitutional rights of employees." In addition, Trump has unleashed a wave of deregulation within federal agencies, including those that regulate banks. Analysts believe that Republicans may test whether Powell supports this trend in some way. A spokesperson for Senate Banking Committee Chairman Tim Scott stated that Scott will emphasize the burden of compliance costs on small banks.

However, Powell may delay new regulatory initiatives, stating that he is waiting for the White House to appoint a new regulatory vice chairman. The Federal Reserve stated:

“No significant rulemaking will occur until a successor is determined.”

Musk Takes the Lead! Hearing Variables +1

Notably, before Democratic and Republican lawmakers officially applied pressure, Trump's ally Musk had already made a series of targeted statements against the Federal Reserve on social media last weekend, suggesting stricter scrutiny of the Federal Reserve. He stated on the X platform:

“All aspects of government must be completely transparent and accountable to the people. No exceptions, including, and especially, the Federal Reserve.”

He also expressed support for former Congressman Ron Paul's proposal to audit the Federal Reserve.

As the head of the newly established Department of Government Efficiency under the Trump administration, Musk and his team have already caused a huge stir in Washington. They have entered multiple government departments, gaining access to sensitive technologies, leading to work stagnation in some large agencies, and urging employees to voluntarily resign.

Last December, Musk also referred to the Federal Reserve as “severely overstaffed” in another article