Press conference exchange between NICOLE GOODKIND and Fed Chair Jerome Powell:

user: Hi, thank you, Chairman. Nicole Goodkind, CNN Business. When does the Committee expect to see a meaningful slowdown in the labor market? And how much weakness will it accept with regard to slower job growth and higher unemployment before it pauses or begins to think about cutting rates?

assistant: So I think you’re already seeing—you’ve seen, in the labor market, what you’ve seen is a decline from very high levels of job creation last year and earlier this year to modestly slower job creation—still, still quite robust, as I mentioned. So you’re seeing that. You’re seeing some increase—some increase in initial claims from insurance, although that may actually have to do with seasonal adjustments. We’re not sure ’s actually real. There’s some evidence that wages—if you look at average hourly earnings, they appear to be moderating, not so yet from the other wage measures. And we’ll be getting the employment compensation index measurement, I think, on Friday, I guess. And that’s a very important one because it adjusts for compensation—composition. So I’d say you—and also, anecdotally, you hear much—the level of concern on the part of businesses that they simply can’t find workers is probably down a little bit from what it was, say, for example, late in the latter parts of last year. So there’s a feeling that the labor market is moving back into balance. If you look at—if you look at job openings or quits, you see them moving sideways or perhaps a little bit down. But it’s only the beginning of an adjustment. But I think most—also, if you look at—I mean, once you start citing these things, you can’t stop. If you look at the household survey, you see much lower job creation, and the household survey can be quite volatile, but it has no jobs created in the last three months. So that might be a signal that job creation’s actually a little bit slower than we’re seeing in the—in the establishment survey. So executive summary is: I would say there’s some evidence that labor demand may be slowing a bit—labor supply, not so much. We have been disappointed that labor force participation really hasn’t moved up since January. That may be related to yet another big wave of COVID. And there’s evidence ’s the case. But—So we’re not seeing much in the way of labor supply. Nonetheless, I would say some, some progress on demand and supply getting back in alignment.

user: And then how much weakness would you be willing to accept before you think about pausing rate cuts?

assistant: So I think we’re looking—we’re going to be looking at, at inflation as well. You know, as I mentioned, we need to see inflation coming down. We need to be confident that inflation is going to get back down to mandate-consistent levels. That’s not something we can avoid doing. That really needs to happen. And, but we do think, though, that the labor market can adjust because of the huge overhang of job openings, of excess demand, really. There should be able to be an adjustment that would have lower than—perhaps lower-than-expected increases in unemployment—lower than would be expected in the ordinary course of events because the level—the ratio of, of vacancies to unemployed is just out of keeping with historical experience. And that suggests that this time could be different.