Powell said in his speech that the Fed will need to go beyond the neutral rate, which is not supportive or restrictive of growth. He said that restrictive policy is needed to tame inflation.
He said that the policy stance was being moved to return inflation to 2%. Restoring price stability will likely require maintaining a restrictive policy stance for a while. There is a historical record that cautions against premature easing of policies.
Four times this year, the Fed has raised interest rates. Two 0.75 percentage point moves in June and July were the most aggressive since the Fed started using its benchmark funds rate as its main policy tool.
The highlight of Wednesday's Fed speeches will be remarks from Fed Governor Lael Brainard. There is an hour and a half later. Fed Governor Michael Barr will make his first public comments since being confirmed as the Fed's powerful banking overseer.
Powell will speak at the institute.
The last big data points will be watched by Fed officials. The consumer price index and producer price index will be included in next week's report.
Hollenhorst thinks those reports will have a bigger influence on moves after September, with a three-quarter point hike likely this month.
Markets may focus on the next increment in November instead of the September hike. The base case is for a slowdown to 50bp but this will depend on the details of the next two inflation reports and the jobs report for September.
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