Analysts Eye Degree To Which Powell Keeps Hikes On Table (3/3)

Some sell-side analyst outlooks for the Powell appearance today - they range from keeping a November hike in play; to maintaining flexibility in future hikes; to pulling back expectations of any further hikes this year:

• BofA sees Powell's appearance as the "last chance to jawbone the markets" if it looks to raise rates at the upcoming meeting. "The question is, does Powell think the strong jobs and CPI data for September warrant delivering a large hawkish surprise ... relative to market pricing? If the Fed is concerned about financial tightening, does it want to cause more of the same, especially given that long-end rates sold off substantially further on the back of the CPI? Beyond guidance on the November move, we expect Powell to be highly non-committal on the path of policy rates. We expect him to reiterate that the Fed is data dependent and remains committed to bringing inflation back to the 2 percent target. In our view, sticky services inflation means sticky policy rates, so the theme of higher for longer remains alive and well."
• Deutsche Bank: "His prepared remarks should largely reflect the tone of last week's minutes, which showed the Committee wanted to shift the debate from "how high" to raise rates to "how long" to keep them elevated. That being said, we will be looking for any hint that the strong September employment and inflation data have caused Powell to reevaluate higher his view of the "sufficiently restrictive" level of rates."
• Mizuho: "The balance of Fed speak points to Powell emphasizing “patience” and the tightening impact of higher long-term yields. The implication is that the Fed is unlikely to raise rates at its November meeting....Despite this near-term rate guidance, the Fed has maintained and is likely to maintain flexibility on the outlook for additional hikes."
• NatWest: "We suspect the chair will stress that the Fed will “proceed carefully in assessing the extent of any additional policy firming that may be necessary”, as well as echo other officials’ comments who have emphasized they will “be taking financial market developments into account along with the totality of incoming data in assessing the economic outlook and the risks surrounding the outlook and in judging the appropriate future course of policy”, which could pull back expectations of a November or December rate hike even more."
• Wrightson ICAP: "Last week’s comments from Fed officials strongly suggested that the FOMC is inclined to pass on a November rate hike, and we don’t expect Chair Powell’s comments on Thursday to change that view. However, being "careful" in November doesn’t necessarily mean being dovish about the subsequent. The Chair is likely to keep the option of future rate hikes squarely on the table."