Yahoo Finance’s Brian Cheung joined Yahoo Finance Live to break down the details of Powell testifying on Capitol Hill in addition to the nationwide outage that hit the Federal Reserve’s banking system.
– Let’s check in with Brian Cheung, because Jay Powell was testifying for a second day on Capitol Hill. But then there was the surprise nationwide outage, which hit the Federal Reserve banking system. What can you tell us about this, Brian?
BRIAN CHEUNG: Yeah, absolutely, well, kicking off things, I guess, with the major breaking news, I guess, that happened in the last hour or so, the Federal Reserve experienced an outage in some of their key settlement systems that allowed banks to, essentially, send funds, transfer funds to one another.
Now, the Federal Reserve says that the outage began at 11:15 this morning. It lasted about three hours, as of about a quarter after 2:00 PM Eastern time. The Fed said that the issue had been resolved and that users should have been able to get back into their settlement system just fine. But then the Fed clarified after that fact they were still in the process of getting that restarted.
And it was only about 20 minutes ago that the Federal Reserve finally said that its major services like Fedwire and the National Settlement Service were back online and had resumed processing their normal services. Now the Federal Reserve has said that this was a Federal Reserve operational error, so not necessarily saying that this was a hack of any sort.
That’s definitely not the case, based on what the Federal Reserve is saying, but again, about a three hour outage that essentially stopped banks and other financial services from being allowed to transfer money from one another, so definitely putting a little bit of a shadow on the chairman’s testimony in the House Financial Services, which happened earlier this morning.
– And Brian, speaking of that testimony, I think a lot of investors are watching. It was the second day in a row. His comments on yields got most of the attention yesterday. Anything surprising to you that we heard from Jay Powell today?
BRIAN CHEUNG: Well, not really. I mean, that’s usually the case in the second day of back to back hearings, a lot of the same questions, a lot of the same answers from the Federal Reserve Chairman.
But of course, the outlook on the economy a real major focus here, and the Federal Reserve Chairman making it very clear that at least for right now the Federal Reserve wants to wait and see where the economy is going to go as the vaccine rollout continues. Here’s what the Fed Chairman said to the House Financial Services Committee this morning.
JAY POWELL: We’re in a situation where the best thing we can do is get those sectors open as soon as possible, and in the meantime, give people the support they need so they can continue the lives that they’ve had.
BRIAN CHEUNG: And those sectors that he was referring to are obviously those high contact, oftentimes low income jobs that have been lost during the pandemic, and an interesting statistic from Lael Brainard a Fed Governor that spoke separately this morning, the unemployment rate for the bottom quartile of US wage earners is about 23% as of January, which means that there’s quite a hole to dig the economy out of, even though, despite we have that 6.3% headline unemployment rate. It definitely masks the true state of job losses, especially among those that are low income.