Powell Signals Rates May Stay High Longer to Curb Inflation

Powell may suggest the neutral rate is higher, meaning rates may stay elevated longer to bring down inflation.

Acknowledging no rate cuts in 2024 could push rates higher on the long end of the curve and tighten financial conditions.

Tighter financial conditions are needed to slow the economy and bring down inflation.

The Fed may shift focus from the front end to lifting the long end of the yield curve to tighten conditions.

Higher long-term yields should widen credit spreads, posing a headwind for equities despite seasonal strength.