At its meeting in Jackson Hole this week, the Federal Reserve is likely to show it's sticking to its guns on interest rate hikes.
A 75 basis point increase at the US central bank's meeting in September is probably not going to happen, according to the bank's strategists.
They think the Fed Chair will be cautious at the economic symposium because of the risk of a recession.
"Our sense is that the Fed leadership feels strongly that it is appropriate to move at a slower pace going forward to reduce the risk of unintentionally causing a recession," a team led by Jan Hatzius said.
Powell wants to repeat this message at Jackson Hole.
The event is being seen as a chance to gauge how the Fed will move at its September meeting now that it has said its policy approach will be data dependent.
The interest rate is expected to be hiked next month. The Fed raised rates by 75 basis points in June and July.
The strategists think that the Fed leadership would prefer to deliver multiple 50 basis point rate hikes rather than another 75 basis point rate hike.
The stock market downturn may prompt the Fed to ease monetary policy. The US benchmark S&P 500 has fallen over the past five days as Wall Street warns that stocks are once again trading at unrealistic valuations.
The Fed leadership may have seen the easing in financial conditions after the July meeting as helpful to its task of keeping the economy on a below-potential growth trajectory, but not problematic enough to scrap its plan to slow the pace of tightening.
The impact of the easing in financial conditions has changed.
Wall Street warns investors not to try to time the bottom of the stock market.