In a govt-shutdown-driven vacuum of macro data, the words uttered by Fed Chair Powell this afternoon could be even more market-moving than normal when he speaks Tuesday before the National Association for Business Economics in Philadelphia.
This is his first major public appearance since the Fed’s policy meeting last month, which exposed significant divisions among Fed officials about the timing and magnitude of future rate-cuts.
Markets will parse Powell’s remarks for any hint of which side of the mandate worries him more.
If he seems focused on the labor market, investors will read it as leaving the door open to another cut or two before year-end.
A tilt toward inflation’s persistence would signal a higher bar for further easing and suggest that the Fed may pause at its Oct. 28-29 policy meeting.
Powell’s speech today comes not only in the absence of fresh economic data but days before the Fed enters its premeeting blackout period at the end of this week.
Investors currently see a 98% chance of another rate cut at the October meeting…
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