What are the major takeaways from the testimony that Jerome Powell of the Fed gave last week and what it means for India?

Here are some of the key takeaways from the testimony given by Jerome Powell, Chairman of the US Federal Reserve, explaining the broad monetary stance of the United States.

· The first big takeaway was that Powell chose to veer towards the dovish group in the Fed like Neil Kashkari who have been insisting on a longer spell of low rates and ample liquidity. Powell appeared to veer towards this view in his Fed testimony.

· It could be all about labour, according to Powell. Powell affirmed that notwithstanding higher inflation and GDP growth data, focus would be on the jobs data. The jobless rate in the US is down from 15.5% last year to 5.6%, but that is still not enough

· Powell suggested that he would want to see the jobless rate down at 4.5% first, which is also the called the level of full employment in the US. Powell was keen that the labour data should improve as it shows the impact on the most vulnerable sections in the US

· Powell was non-committal on the Fed view of 2 rate hikes by 2023, focus instead on the all-important labour data for a final decision. Powell has tried to downplay the risk to markets by making jobs data the pre-condition. GDP and inflation alone is not enough.

· So that means, rate hikes will be gradual rather than sudden. It will also be data contingent with focus on jobs rather than just on inflation and GDP growth. US does not want to take the risk of 2015, when it appeared unilateral.

· Overall, that is good news for India. It shows that the risk of a sudden and rapid rise in interests or of hardening liquidity is quite remote till the end of 2022, and perhaps even beyond that.