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Fed Chair Jerome Powell has for months — feels like years, frankly — reiterated the need for “more data.”

On Capitol Hill this week, he nodded to the risks of waiting too long to ease rates, with an eye out for a cooling labor market. Wall Street took his remarks as another optimistic sign that cuts are on the way. And now with Thursday’s encouraging inflation data, which arrived with the unambiguous glee of a birthday party blower, has the Fed finally gotten what it needs to make a move?

Markets are saying what Powell can’t: Yes.

After this latest, reassuring inflation reading, markets were pricing in an 84% chance that the Fed will begin cutting rates at its September meeting, up from 73% a day prior, according to CME FedWatch.

“A September rate cut should be a done deal at this point,” said Lazard chief market strategist Ron Temple. "Given the increasing evidence of slowing economic growth, it’s time for the Fed to refocus on the dual mandate and ease monetary policy.”

Last week brought the latest evidence that the Fed should turn to mind its full employment mandate. The June jobs report showed the unemployment rate ticked up for the second month in a row to 4.1%, the highest level since November 2021. The figure is not historically high, but in the pandemic-era tightening cycle, it’s getting up there.

As jobs data downsides are piling up, a streak of favorable inflation data is shaping into a trend. Things finally seem like they are falling into place.

The bottom line, as Jeffrey Roach, chief economist for LPL Financial said, is easing inflation should allow the Fed to begin cutting rates as labor market data becomes more tenuous.

Of course, the Fed's preferred inflation measure carries more weight. The next PCE reading will be published later this month, just days before the Fed’s July policy meeting.

Even encouraging data is unlikely to prompt the Fed to abruptly change policy. But it will set the tone for the meeting and the press conference, offering a final inflationary insight before Powell has to once again explain why rates will remain the same. And perhaps cue up a momentous September with a bureaucrat's wink.

Powell’s critics have hammered his leadership for being too reliant on backward-looking data. But when the good news is resoundingly good and the bad news starts to turn ugly, that may be when enough is enough.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

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