Hmm that’s an interesting/good point

It may not be directly related to employment, but if consumer sentiment goes down (which is definitely related to employment), and people think storms are ahead, they probably start to reduce spending (especially on things like travel, etc) which curbs demand side and should bring down prices

Hmm, but with inflation that leads to higher interest rates, higher interest rates means cost of borrowing becomes more expensive, this leads to less capital raising by companies (leading to less ventures and reduction in hiring) and for companies on the fringe, they won’t be able to raise capital to maintain (potentially) headcount / opex.

We may be at a weird time where with covid and baby boomers retiring, the surplus of jobs to job seekers can counteract this (which may be what Powell is referring to) but the above should hold — unless the vast majority of companies in the US right now are well capitalized, which seems unlikely

I could be missing something. Higher rates to cost of borrowing reductions may definitely lag a bit

The Fed looks at core-CPI ex food and gas, which is still way higher than they want.

They can’t curb supply side, so they are trying to curb demand side. Another side to this is that they want to dampen the labor market which helps reduce wage-spiral inflation a bit