Breaking: Fed chair Powell speech sends US Dollar lower

Makes sense to moderate pace of interest rate hikes.
    
Time to moderate pace of rate hikes may come as soon as december meeting. 

Have made substantial progress toward 'sufficiently restrictive' policy, have more ground to cover.
 'It seems to me likely' rates must ultimately go 'somewhat higher' than policymakers thought in September.
    
 Likely to need to hold policy at restrictive level 'for some time'.
    
History cautions strongly against prematurely loosening policy.

We have a long way to go in restoring price stability.
    
We will stay the course until the job is done.
    
Inflation remains far too high.
    
October inflation data was 'welcome surprise,' will take 'substantially more evidence' to give comfort inflation is actually declining.
    
We estimate pce price index rose 6% in 12 months through october; core pce rose 5%.
    
 Path ahead for inflation 'highly uncertain'.
    
Growth in economic activity has slowed to well below longer-run trend, and this needs to be sustained.
    
Far too early to declare goods inflation vanquished, but if trend continues, goods prices should begin to exert downward pressure on overall inflation in coming months.
    
 Expect housing services inflation to begin falling sometime next year, if lease trends continue.
    
 Have so far seen only 'tentative' signs of moderation in labor demand, wage growth.
    
Moderation in labor demand growth will be required to restore labor market balance.
    
Price stability is fed's responsibility, bedrock of economy.

Hard to pin down the natural rate of unemployment given disruption in labour market.

The initial surge of inflation not related to wages, but wages are going to be important going forward.

In the service sector, in particular, wages need to rise at a level consistent with 2% inflation over time.

Probably 1.5 to 2% above that now given adjustments for productivity.

Jolts data today show a continued imbalance between demand and supply of workers.

There is a role in moderating demand to get the labor force back into balance.

For most workers now increases in wages are being offset by inflation.

JOLTS data today was more or less in line with expectations, decline in openings a positive.

A possibility labor market can return to balance through decline in job openings, still to early to tell .
powell: hard to pin down the natural rate of unemployment given disruption in labor market.
    
 In this situation fed continues to think number of vacancies versus number of unemployed is important.
    
 Questions about elasticity of supply an important set of issues the fed is thinking about.
    
Has been that fed could "look through" supply disruptions; not sure if that will continue.
    
 Fed still has a 2% inflation target it has to meet, even if supply conditions change.