If Jerome Powell was concerned about the criticism he garnered last week for failing to pound the table on the counterproductive nature of easier financial conditions associated with rallies in financial assets, he didn’t show it Tuesday.

The Fed expects 2023 to be a year of significant disinflation, he said, in closely-watched remarks for an event at the Economic Club of Washington D.C. He also appeared to double down on the idea that the Fed has succeeded in tightening financial conditions, even as he nodded to the necessity of additional rate hikes.

Readers will recall that, during last week’s press conference, Powell was given the opportunity to reiterate the message from the December FOMC minutes, which contained a rare rebuke of markets. “An unwarranted easing in financial conditions, especially if driven by a misperception… of the Committee’s reaction function, would complicate the effort to restore price stability,” the account of 2022’s final policy gathering said.

Powell said no such thing when queried on the same dynamic last week. Moreover, his contention that financial conditions were markedly tighter looked incongruous with several FCI gauges, including those maintained by Goldman and Bloomberg.

Bloomberg’s index is actually looser than when the Fed delivered its first hike of the cycle. Frankly, I think that says more about Bloomberg’s methodology than it does about Powell, but that’s another discussion.

Powell on Tuesday repeated, pretty much verbatim, the press conference language on the disinflationary process (it “has begun”) and financial conditions (they “have tightened”). If there was anything overtly hawkish about Powell’s Tuesday remarks, it was probably his assertion that the Fed has a “significant road ahead” to coax inflation back down to 2%, and what felt like an obligatory allusion to the possibility of a higher terminal rate — data dependent, of course.

But to my mind, that didn’t offset what otherwise seemed like a market-friendly tone. At one point, for example, Powell said the Fed “isn’t looking to surprise markets” with FOMC decisions. He also said the Fed still expects the labor market to soften, called that the most “likely” outcome, reiterated his expectation for second-half disinflation in housing services, said the Fed isn’t considering active MBS sales and blamed “the pandemic itself” for a “big part” of inflation.

Although Powell opined that rates probably haven’t yet met the Fed’s goal of “sufficiently restrictive,” he tempered that by noting the FOMC forecasts are conditional on the incoming data. The disinflationary process “has a long way to go” and the ride will probably be bumpy, he went on. The labor market is “at least” at maximum employment, he said.

Powell suggested the shortage of labor may be more structural than cyclical, which you could view two ways. A hawkish interpretation would be that if the US economy is likely to experience a chronic dearth of labor, monetary policy will have to be perpetually vigilant for evidence that the wage-price nexus threatens to push up inflation. A dovish interpretation would be that a structural shortage of labor isn’t something the Fed can address, and so monetary policy will eventually have to accept it as a fact of life. Immigration could help ease labor shortages, but one party in America’s political duopoly is antagonistic towards “open doors,” as it were.

Ultimately, Powell managed to reclaim a bit of hawkish ground by touting 2% inflation as the “global standard,” and reiterating that the Fed isn’t considering any changes to the target. He said it’ll likely be 2024 before Americans see 2% inflation again, and echoed remarks from Raphael Bostic and Neel Kashkari+, both of whom suggested the peak for Fed funds may need to be higher considering the labor market strength evidenced by January payrolls. Powell’s concession that if strong labor market data persists, the terminal rate may be higher, didn’t feel like a ringing endorsement, though. He wasn’t out to scold anyone on Tuesday.

The consensus was that Powell’s message was “nuanced,” an apt description, I suppose, given the market’s roundtrip as he spoke. Terminal rate pricing remained above 5%, even as traders still don’t seem completely convinced that a May hike is a foregone conclusion.