Fed Chair Powell to deliver key speech Thursday: Here's what to expect

cnbc.com:

Federal Reserve Chair Jerome Powell is set to deliver what could be a key policy address Thursday, in which he will be tasked with convincing markets the central bank is committed to keep hammering away at inflation, but perhaps now needs a little less force.

The top monetary policymaker will speak at noon ET to the Economic Club of New York at a critical time for the U.S. economy.

Inflation numbers have been improving lately, but Treasury yields have been surging, sending conflicting messages about where monetary policy might be headed. Markets largely expect the Fed to stay on hold with rates, but they will be looking to Powell for confirmation and clarification on how officials view both current conditions and longer-term trends.

«Powell is always tacking back to whatever helps feed the narrative that they need to stay vigilant, and for understandable reasons,» said Luke Tilley, chief economist at Wilmington Trust. «I just expect him to keep talking about the strength of the economy and the surprising strength of the consumer in the third quarter as a risk for inflation. That is enough ammunition to keep talking about staying vigilant.»

Essentially, Tilley expects the Powell message to break into three parts: The Fed needed to get rates high quickly, which it did; that it had to find a peak level, which is part of the current debate; and that it needs to figure out how long rates need to stay this high to get inflation back to its 2% target.

«Really, their ultimate goal is to keep financial conditions tight so inflation comes down,» he said. «He's going to use that framework, even if he's dovish about Nov. 1 [the next Fed rate decision] or December to shift the hawkishness to that third question of how long to keep