Yellen testimony could become "verbal slugfest"

Federal Reserve chair Janet Yellen is set to deliver her half yearly testimony on Wednesday afternoon and one market analyst believed some lawmakers may see it as an opportunity to shine.

Yellen will appear before the House Committee on Financial Services at 1500 GMT, and will face the Senate Committee on Banking, Housing, and Urban Affairs at the same time on Thursday.

Monex Europe’s head of market analysis Ranko Berich said with emotions running high due to the US primary races, Yellen is wading into the political arena.

“Given the level of sectarian extremism and political grandstanding at the moment, it’s likely that some lawmakers will look to grab the spotlight at Yellen’s testimony by trying to tear a chunk out of the Fed chair.”

He noted that after the contentious decision to raise interest rates in December, the committee members have plenty to ask the Fed chair about.

“Amidst challenging global conditions the US economy is slowing, giving substantive grounds upon which to question the decision to hike.”

Berich said that if the primaries are anything to go by, it could turn into a “verbal slugfest”.

“While Yellen has proven herself to be dominant, tenacious and authoritative in the face of aggressive questioning, she may find herself on shaky ground in this testimony.

“The Fed Chair is an economist after all, not a political brawler, and the uncertainty the Bank is dealing with at the moment may translate poorly into the language of Capitol Hill."

He also commented US politics seems to have descended into something he termed a ‘demogogueracy’, where leaders are put into a ring to see “who can say the most offensive thing the loudest”.