During the Jackson Hole Symposium, Fed Chair Powell delivered a candid message: inflation has slowed but remains undefeated despite the aggressive series of rate hikes implemented since 2022. This hawkish assessment, however, was tempered by a prudent note: policymakers will “proceed carefully” in any further move, signaling a resolute commitment to data-driven decisions ahead.

The shift towards a data-dependent approach will inject a new level of significance into incoming economic information. For this reason, the next labor market report scheduled to be released on Friday morning may play a critical role in the central bank’s reaction function, becoming a compass of sorts to guide the policy-formulation process at FOMC meetings.

Focusing on the upcoming U.S. employment survey, nonfarm payrolls (NFP) are expected to have grown by 170K in August after a 187K increase in July, allowing the unemployment rate to hold steady at 3.5%. Meanwhile, average hourly earnings are seen rising 0.3% monthly and 4.4% year-on-year, with the latter figure somewhat too high and inconsistent with the inflation target of 2.0%.

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