Jerome Powell kicked off two days of congressional testimony on Tuesday with a set of boilerplate remarks that broke no new ground.

As discussed here at some length in this week’s macro preview, Powell’s semi-annual waterboarding session on Capitol Hill wasn’t expected to be a tradable event, with one possible caveat.

Here’s how I put it a few days ago: The chances of Powell saying anything to materially change traders’ outlook on policy for the balance of the year are de minimis, although he may suggest the Committee’s close to having the confidence it needs to reduce the amount of policy restriction.

In other words, it’s possible Powell could begin laying the groundwork for a cut in September. Recall that according to Powell’s own account during last month’s press conference, Fed officials didn’t change their SEP submissions at the June FOMC to account for the favorable CPI data released just hours before the policy decision. That was probably prudent — i.e., just in case the favorable figures were another false dawn or “head fake” — but it meant that in the event subsequent data confirmed price growth was in fact back on a declining trajectory in the US, the June dot plot would be viewed by markets as completely stale.

That’s a little context for Powell’s prepared remarks, which found the Fed chair describing the most recent monthly inflation prints as indicative of “modest further progress.” Inflation, he said, has eased “notably,” but it’s still too high.

Growth slowed in the first half of the year following an “impressive” back half of 2023, and although consumer spending looks to be decelerating, it’s “still solid,” he went on, before describing the labor market as back to normal. “A broad set of indicators suggests that conditions have returned to about where they stood on the eve of the pandemic: Strong, but not overheated,” he told lawmakers.

Powell also suggested America’s becoming a more egalitarian economy. “The strong labor market has helped narrow long-standing disparities in employment and earnings across demographic groups,” he ventured. (What?! Why are you laughing? You didn’t get a raise and a redistribution check this month? Check with your PR department. And the Post Office. There must’ve been a mistake.)

Here’s the key passage from Powell:

The Committee has stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%. Incoming data for the first quarter of this year did not support such greater confidence. The most recent inflation readings, however, have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2%.

There’s nothing “new” there, but if you need it spelled out for you — if you aren’t adept at reading between the lines — allow me: The Fed’s encouraged by the last two inflation reports, which most Committee members probably believe constitute proof that the succession of warm releases in January, February and March were just a “blip,” but in public, they’re going to downplay evidence of disinflation until it’s sufficiently confirmatory to justify a cut.

The idea, probably, is to move in September. They’re hoping (against hope, perhaps) that the June and July inflation figures back up the message from the April and May releases, giving them air cover to start dialing it back in September, when the SEP refresh could tip a pair of cuts for the year including a hypothetical move at that meeting.

Powell on Tuesday underscored the familiar contention that the balance of risks is now more symmetric. “[I]n light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said.

In other words, the Fed’s not operating on a de facto single mandate anymore. Powell wouldn’t put it this way, but in the event of a negative NFP print, the Fed will cut at the first opportunity, which is to say at the very next meeting.