Federal Reserve Chair Janet Yellen will testify before Congress on Tuesday and Wednesday of this week to give her semi-annual report on the health of the United States economy and Fed efforts to help jumpstart a recovery that, while still trending upward, has started to slow in recent months.
Yellen is expected to be challenged by politicians from both sides of the aisle as Republicans continue to call for more transparency in the central bank and Democrats demand that it do more to reduce inequality in the economy. Both sides will pressure her to acknowledge a rise in inflation and an improving labor market.
For her part, there is wide speculation that the Fed Chair may take a more aggressive tack than she has in previous meetings with congress by outlining a time frame to raise interest rates in an attempt to calm inflationary fears.
Economists disagree about whether the time is right for the inevitable interest rate increase but the fact that it is even being considered points to an economy that is closer to being able to stand on its own two feet without the Fed injecting more stimulus. Interest rates on mortgages, for instance, have remained at or near record lows for several years.
Fed officials seem to be more confident as well.
Last week it was reported that the Fed appears set to end its bond buying program, which it had been slowly tapering off, as soon as October, a move that would hold significant symbolism for the markets.
Still, other economists hold that with a disappointing first quarter for the economy and a housing market that has slowed in the first half of 2014, the recovery is still far too fragile for the Fed to change anything.
Whatever the result, Yellen should give a good indication on Tuesday about the direction that the Fed will be taking monetary policy for the remainder of the year.