Powell’s Speech Tomorrow Acts as a Policy Watch Window, Unexpected Inflation Surprise Breaks Market Wait-and-See Expectations

September inflation data has dashed market expectations that the Federal Reserve could hold off on further rate hikes. Over the past several weeks, multiple Fed policymakers had signaled the central bank did not need to rush another rate increase, but the latest data has made the October policy meeting a key potential action point again. Fed Chair Kevin Warsh previously pledged not to guide markets via short-term monetary policy outlooks. However, following the unexpected inflation uptick, markets are closely watching his speech in Bangkok on Thursday evening (New York time, 11:30 am Beijing time on the 16th). At the event, he will join International Monetary Fund (IMF) Managing Director Kristalina Georgieva for a fireside chat. The Federal Reserve will enter its media blackout period on Saturday in preparation for its October 27-28 policy meeting. Ahead of that, if the Fed wants to convey signals about its interest rate decisions to markets, Warsh’s speech will serve as a key window.