Federal Reserve Chair Jerome Powell testified before the Financial Services Committee of the US House of Representatives, outlining key takeaways from the hearing. Powell indicated the likelihood of ‘broad and material changes’ to the plan requiring large banks to hold more capital, with the possibility of scrapping the draft plan for a new one. He reiterated the Fed’s forward guidance on interest rates, stating that the policy rate is likely at its peak and it will be appropriate to begin dialing back policy restraint ‘at some point this year.’ Powell expressed confidence in the solid pace of the US economy, downplaying recession risks in the near term and emphasizing the Fed’s monitoring of commercial real estate issues. He also mentioned the Fed’s cautious approach to cutting rates, stating the need for more evidence of sustained inflation before taking action. Market reaction to Powell’s testimony was limited, with futures still pricing in the likelihood of the first Fed rate cut in June.