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Three things markets expect to hear from Fed and Powell

Here are three comments investors expect to hear on Wednesday afternoon.

1. Balance sheet . Fed's balance is now underway, according to news reports that the program is being processed by Fed officials and not on "autopilot" forever.

"It's clearly one of the most important things being discussed," said Luke Tilley, chief economist at the Wilmington Trust. "I think it will be a pretty uneventful meeting when it comes to the information we get, like the public." But Tilley expects the Fed to discuss what level it wants the balance to be, and the Fed staff is likely set to deliver a presentation on it.

For Powell, Fed observers expect him to bow in the balance sheet and notice it's under review.

2. "Patience and flexibility" . Powell introduced that the Fed could have "patience" when he put on a panel of former Fed chairs Ben Bernanke and Janet Yellen in early January. It was a calming sentence and a market expects to hear again.

"I think they need to add some language to patience and need to be patient. That's what the markets want right now," Harris said.

3. Listen to data and markets. Data addiction takes on a new meaning. Fed officials are expected to continue to emphasize that they will base speed decisions on incoming data, rather than walking on a preliminary plan. But Fed watchers expect that they also emphasize that they will be aware of the type of message they can get from markets and business executives on the economy.

Furthermore, Powell is probably asked to discuss what the Fed did while it went without weeks of government data that was not available because of the government's suspension.

"A good baseline expectation for the press conference will be Powell reemphasizing the patience and caution and evaluation of the data it comes in. There are definitely expectations of the Fed to be tough," said Ben Jeffrey, strategist at BMO.

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