Powell Could Push Against Pause, Highlight Labor Imbalances (2/2)

Overall, don't expect Powell's commentary to be much different to what he said in Nov, which was taken hawkishly at the time: the FOMC won't hesitate to raise rates higher and keep them there longer without clear evidence of inflation decelerating toward target.

• So he may acknowledge that October's print was a welcome development, while downplaying the signalling value.
• He may again push back against the notion that slowing hikes means a pause is nigh (in Nov he called a pause "very premature").
• That word "very" might be the key - any less effusive language could be taken dovish.
• Given the title of the event ("Economic Outlook, Inflation, and the Labor Market"), he will likely point to labor market dynamics as a key factor in decision-making going forward.
• The default expectations is that he remains uncomfortable with supply-demand dynamics (in Nov: "the broader picture is of an overheated labor market where demand substantially exceeds supply".)
• The speech was probably prepared well in advance of today's JOLTS data, but it would be very surprising if he didn't get asked about the reading.