If a surprise emerges, it could involve forward guidance or comments on inflation. Powell could hint at either an accelerated pace of cuts in 2024 or an earlier-than-expected pause. A more aggressive stance would imply the Fed sees greater economic risks, while a pause might suggest caution, possibly impacting market sentiment.

Markets are confident in Thursday's 25 basis point cut, expected to address the slowing economy and falling inflation pressures after two years of aggressive rate hikes. Powell's press conference will likely convey a cautious stance, steering clear of election-related judgments while emphasizing a measured approach to future fiscal policies.

Krishna Guha of Evercore ISI expects Powell to maintain a neutral tone, aiming to "be a source of stability and calm" as the Fed assesses the impact of new policies, including tax cuts and tariffs.

Current projections favor another cut in December, followed by a potential pause in January. However, Trump's policy priorities -- tax cuts, spending hikes, and tariffs -- could reignite inflation, complicating the Fed's plan. Trump's past calls for low rates could also shape fiscal expectations, with inflationary pressure and consumer debt remaining key concerns.

Attention is turning to the Fed's "terminal rate," the potential endpoint for rate cuts. Should Powell signal a lower-than-expected terminal rate, it would suggest an openness to further easing. Alternatively, a conservative stance could imply fewer cuts. Quincy Krosby of LPL Financial suggests Powell will likely avoid declaring victory on inflation, retaining flexibility amid uncertain inflation risks.

The Fed's balance sheet reduction, trimming $2 trillion in Treasuries and mortgage-backed securities since June 2022, is expected to continue. However, adjustments could come if rate conditions tighten further, prompting closer scrutiny in future meetings.

While a rate cut is expected, any surprises in Powell's outlook could spark volatility. Hints of further cuts or an early pause could boost equities and reduce yields, while cautious statements about inflation or a limited easing cycle could dampen market optimism.