Events in Ukraine continues to be the chief source of news in DC and will continue to be the main driver of headlines in the coming week. This past week the House and Senate met in a joint session to hear a speech by Ukraine President Zelensky and gave the Ukrainian President a prolonged standing ovation. Congress appears ready to give Ukraine anything that they and the Administration request. The big $1.5T budget deal included nearly $14B for Ukraine.
Biden is walking a fine line in his effort to keep the global alliance together that has closed most doors to Russian imports and exports. China is the wild card and after a two-hour meeting between Biden and Xi, both nations’ want to see a cease fire and an end to the Russian invasion. China’s position, which had been neutral to a slight nod to Russia, appears to be moving more towards a role of trying to be an honest broker.
The Fed made its long-anticipated rate move raising rates by 25bps. While FOMC members Bullard and Waller favored a more aggressive increase of 50bps, the Fed made clear it will watch data in the coming month before the next meeting and another rate action. By meeting monthly, it gives the central bank time to review economic data and world events. Shortly after the Russian invasion of Ukraine there was some speculation that the much-telegraphed rate increase might not happen, but Fed Chair Powell quickly cleared the air and in Congressional testimony made statements pointing to the increase.
On the Fed front in Congress this week saw the Senate Banking Committee break a deadlock and approve the nomination of Chair Powell for a second term, and the nomination Philip Jefferson as a Board Governor. The committee tied with a 12 to 12 vote on Board nominee Lisa Cook but that still allows the nomination to go to the Senate floor for a vote. If the vote is a partisan tie on the Senate floor Vice President Harris would break the tie for confirmation.
Interestingly, the vote on Powell to be Chair was 23 to 1, with Senator Elizabeth Warren being the sole NO vote. It shows the broad support Fed policy under Powell’s leadership has had during the tough times of the pandemic.
The deadlock on Powell and the other nominees was broken when Democratic Senator Joe Manchin announced that he would oppose the nomination of Sarah Bloom Raskin. The Raskin nomination had been strongly opposed by Banking Committee Republicans and they had blocked the Committee from meeting to approve the other nominees. Manchin’s announcement made clear that the Raskin nomination could not win approval from the Senate and she withdrew her name and cleared the way for the Committee to meet and vote on the other nominees. One issue worth watching in coming weeks is the hearings House Democrats plan on gasoline prices. The rate of gasoline price increases, and the profits of oil companies, has long been a rallying cry for Democrats. The House Energy and Commerce Committee has announced its intention of holding a hearing with oil company executive in April, though no date has been set.
