While discussions at the Federal Reserve’s Jackson Hole Symposium will cover various topics, investors remain especially focused on Fed Chair Jerome Powell‘s speech scheduled for Friday at 10 a.m. ET.

The market, historically, is sensitive to any short-term monetary policy guidance Powell offers.

Recall 2022. Powell hinted that policy would likely need to stay restrictive “for some time” to bring inflation down. He suggested that another 75 basis point hike “could be appropriate.” This caused a spike in Treasury yields and a downturn in equities. The S&P 500, tracked by SPDR S&P 500 ETF Trust ( SPY ) , dropped over 3% as this Benzinga analysis shows.

This time around, market-moving reactions are less likely to stem from whether a rate cut will occur at the September Federal Open Market Committee Meeting (FOMC). That scenario is already fully priced in by market participants.

What matters more is the size of that cut.

Speculators favor a 25 basis point cut, assigning it a 75% probability, according to the CME Group‘s FedWatch tool as of Thursday.

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What Do Analysts Expect From Powell’s Speech?

“We expect Powell to express a bit more confidence in the inflation outlook and to put a bit more emphasis on downside risks in the labor market than in his press conference after the July FOMC meeting, in light of the data released since then,” said Goldman Sachs economist David Mericle.

He added that such comments would likely reinforce market expectations of a rate cut in September while deferring the 25bp versus 50bp question to the August employment report. Goldman Sachs is forecasting a series of three consecutive 25bp cuts in September, November, and December.

A dovish surprise could be any hint that the funds rate level is inappropriately high, while a hawkish surprise might come from highlighting that broad financial conditions remain relatively loose, according to Mericle.

“Elevated expectations of 100-125bps cuts in the federal funds rate over the coming six months have helped sink the entire Treasury yield curve,” said Ed Yardeni, president of Yardeni Research. He expects Fed officials to push back against these expectations if the next batch of economic indicators exceeds projections.

Bank of America anticipates Powell may lean toward modifying the July FOMC language to suggest the committee is “very close” or “close” to initiating easing.

A further signal could be Powell’s stronger emphasis on avoiding “unexpected weakness” in the labor market, rather than simply responding after it occurs.

“The risk is more hawkish Fed communications. If Powell does not signal a rate cut at the September FOMC meeting or suggests that large-scale rate reductions are off the table, we would expect a meaningful bear or twist flattening of the UST curve,” wrote Bank of America rates strategist Mark Cabana.

Toronto Dominon expects Powell to signal that the Fed is ready to begin its anticipated easing cycle at the September FOMC meeting. Recent favorable data, particularly on inflation, should support Powell in signaling readiness to ease. However, they remain skeptical that Powell will fully commit to the size of the rate reduction.

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