- More evidence of above-trend growth or that the labor market is no longer easing, could warrant further hikes
- Extent of additional firming and how long to keep policy restrictive will depend on data, outlook and balance of risks
- Significant tightening financial conditions with higher bond yields can have implications for policy, we are attentive
- Policy stance is restrictive
- Recent data shows ongoing progress toward inflation and employment goals
- Return to 2% inflation likely to require period of below-trend growth and some further softening of the labor market
- A few months of good data is only the beginning of what it will take to build confidence on the inflation path
- Indications of wage growth show a gradual decline towards levels that would be consistent with 2% over time
- Inflation readings turned lower over the summer, a very favorable development. The September inflation data continued the downward trend but were somewhat less encouraging
- Shorter-term measures of core inflation over the most recent three and six months are now running below 3 percent
- We are attentive to recent data showing the resilience of economic growth and demand for labor.
- Full text
Ahead of the speech, pricing for a November hike was 8%, rising to about 50/50 for the January 31 meeting. Both those numbers are down, but only slightly, after the headlines.
The market is seeing it as dovish and the US dollar is sliding but I'm not quite so sure I agree. The WSJ is running with a headline that "Fed’s Jerome Powell Signals Extended Pause in Interest Rate Rises" by Nick Timiraos, highlighting the 'proceeding carefully' line and progress on goals.
I think the data is much more important than speeches right now and initial jobless claims falling to the lowest since January today is something that will keep the hawks pining for more hikes. The TLDR on this speech is: Wait and see; we're watching the data.