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Powell Notes 2023 Dot Is "Peak"; Eyes "Substantially More Evidence" On CPI

FED
A few other things about Powell's commentary that stood out:
  • He clearly signalled that the Dot Plot median for 2023 was the "peak rate". Which is somewhat dovish in the sense that it doesn't represent the rate after hitting a higher peak mid-year and then cutting by year-end.
  • But by the same token, he made clear that the soft Nov inflation print was incorporated into this set of projections, which of course saw a much higher core PCE rate than September's edition.
  • And "overwhelmingly FOMC participants believe that inflation risks are to the upside so I can't tell you confidently that we won't move up our estimate of the peak rate again at the next SEP."
  • The Oct and Nov inflation reports showed a "welcome reduction" in monthly inflation pace, but the FOMC needs to see "substantially more evidence". (Somewhat different from his "clear and convincing evidence" criteria seen earlier in the year.)
  • Powell reiterated the labor market remained "extremely tight". While he said the jump in hourly earnings in the Nov payrolls release could be attributed to volatility and compositional factors, he reiterated that "wages are running well above what is consistent with 2% inflation."
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