Jerome Powell regaled the ECB’s annual central banking conference in Sintra on Wednesday. His remarks were mostly perfunctory.

Markets expected very little, if anything, from Powell. There are only so many ways to say the same thing, and he’s not an especially gifted off-the-cuff speaker.

Between June’s FOMC press conference, two days of congressional testimony and now Sintra, Powell was compelled to paraphrase himself and otherwise summarize the consensus among his colleagues three more times this month than he probably cared to, which is to say once would’ve sufficed.

Fed policy hasn’t been restrictive for long, and there’s more restriction coming, he said Wednesday, adding that the US labor market is really pulling the economy along. He reiterated the message from the dots (that most officials see two more hikes in 2023) and indicated the FOMC doesn’t generally believe they’ve reached “sufficiently restrictive” settings.

The figure above is just an obligatory nod to the notion that the real Fed funds rate isn’t any semblance of draconian. Obviously, the picture looks different if you assume the Fed hikes further (or just holds here) and inflation recedes, but that’s an exercise in question-begging.

Goods inflation has come down over the past six months, and new rents are moderating, Powell went on. But the Fed hasn’t seen progress on the collection of categories which comprise the “core services ex-housing” metric policymakers are watching for evidence that inflation is on a sustainable path back towards target.

In a somewhat rare allusion to wage-price spiral dynamics, Powell said labor costs are indeed an issue in services inflation. That’s self-evident, but Fed officials generally try to skirt the issue in public. The jobs market, Powell reiterated, is still out of balance. The Fed is hoping that changes, because the path to a soft landing goes through a more balanced labor market.

As ever, Powell expressed something like confidence in the immaculate disinflation narrative, which says tighter policy can render millions of job vacancies superfluous, thereby easing the tension which is keeping wage growth elevated above levels economists see as consistent with price stability.

Although wage growth has moderated, it’s still around 2% “too” high, even as wage growth for some workers is negative on an inflation-adjusted basis.

This is always the same absurd chicken-egg dilemma, and it manifests in what some low-income cohorts might fairly describe as an insulting proposition: Your wages are falling on an inflation-adjusted basis because you’re making too much money.

The good news is that the immaculate disinflation narrative actually does appear to be playing out, albeit slowly. Never in the modern history of the US economy have job openings plummeted without a sharp rise in the unemployment rate.

The figure above, from Goldman, shows just how anomalous this situation really is, and the fact that it’s happening is cause for (cautious) optimism. Of course, the unemployment rate moved up markedly in May. Next week, traders will get an update on JOLTS a day before June’s NFP report.

Powell conceded the “significant probability” of a downturn for the world’s largest economy, but also said it’s not the base case. Or not his base case, at least. It was staff’s base case as recently as May, though.

The data is currently consistent with an economy that’s resilient and expanding, but it’s still appropriate to slow the pace of hikes, Powell said, on the way to recapping a few talking points from this month’s FOMC presser. The risk of doing too much versus too little is more balanced after 500bps of rate hikes, and although longer-term inflation expectations are still anchored, the longer price growth runs hot, the higher the risk inflation becomes entrenched.

The Fed isn’t concerned about any one specific market, commercial real estate didn’t factor into the decision to pause (or “skip,” if you like) in June, bank credit conditions have tightened and it’s going to take some time to wrestle inflation back down to target.

Policy will be restrictive as long as necessary, and inflation isn’t likely to get back to 2% this year or even next. The Fed, Powell emphasized, is nowhere near confident that inflation is on its way back to target.