A couple more interest rate hikes are probably on the way. But the Fed is in no great hurry to deliver them. That's the takeaway from the latest round of communications out of the central bank in the last 24 hours.

Why it matters: It implies that the Fed is not in a full-scale effort to tighten the screws on the economy, but rather a cautious recalibration in light of inflationary pressures and robust growth.

• With Fed chairman Kevin Warsh declining to offer much in the way of guidance, traders and Fed watchers must look to other communications for clues — and the message has been strikingly consistent across the latest crumbs of information.

Driving the news: Speaking this morning in Istanbul, Fed governor Christopher Waller explained, with distinctly non-Warshian detail, what kind of interest rate path he anticipates.

• "If the economic data continue to come in as expected, I anticipate additional hikes to support a timelier return of inflation to our 2 percent goal," he said.
• "But there is some flexibility about when those hikes will occur. The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time."
• That aligns with the language in the minutes of the September policy meeting released yesterday afternoon, stating that "most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year-end," but that they "approached each meeting with an open mind."

Of note: The minutes and Waller comments come after fairly explicit comments last week from vice chair Philip Jefferson and New York Fed president John Williams waving away expectations of a second rate increase at a meeting concluding Oct. 28.

Zoom in: That doesn't answer the question of how big this tightening cycle will turn out to be. But the tea leaves point to one more rate hike at this year's final meeting and another early in 2027.

• That would amount to a total of 0.75 percentage point of rate increases, the same size adjustment as easing cycles in 2019 and 2025.
• Waller, in an extended musing about Fed communication strategy in this morning's speech, used a 0.75-point adjustment as the hypothetical cumulative adjustment. If nothing else, it's a hint that he sees three rate hikes in this adjustment cycle as the most probable course of action.

Between the lines: Warsh is determined to maintain optionality and not pre-commit to a policy path, and he still has that. But talk of leaving rates steady in October and keeping the cumulative adjustment modest tells us something about what kind of rate cycle Fed leadership envisions.

• This is not — in their view, at least — the beginning of a sustained, open-ended tightening cycle needed to slow the economy and break the back of inflation, as last seen in 2022.
• Rather, it's a take-your-time, limited operation to better calibrate policy for the mix of solid labor market results, accelerating growth and elevated inflation that they see.

What they're saying: "With evidence that economic activity is strengthening in the second half of this year, I am not greatly concerned that tighter monetary policy threatens a damaging slowdown in the economy," Waller said this morning.

• "But I am concerned that the recent acceleration in inflation — after what soon will be five and a half years of it above the FOMC's target — will lead consumers, investors, and price-setting businesses to revise up their expectations for future inflation."

The bottom line: Investors can take solace that the Fed is not preparing aggressive action to take away the punchbowl. The open question is whether this limited tightening will do the trick in getting inflation down faster.

New applications for unemployment benefits have stayed below 200,000 in a stretch rarely seen in modern history.

• Jobless claims fell by 2,000, to 197,000, last week, the Labor Department said this morning.

Why it matters: It points to a remarkable stability on the "firing" side of the labor market, even amid a slower pace of hiring on the other side of the equation.

• That is helping to keep unemployment low, but it also masks a growing divide between Americans who have jobs and those struggling to find one.

What they're saying: "New jobless claims have been under 200,000 for a month now, an incredibly low level of layoffs for a sustained period of time that hasn't been seen since the 1960s," Navy Federal Credit Union chief economist Heather Long said.

By the numbers: The four-week average, which smooths out weekly volatility, fell to 198,000, its lowest level since the red-hot job market of 2022–2023.

The other side: Jobless claims don't capture every layoff. Some workers receive severance, don't qualify for benefits or find the application process too cumbersome.

• Still, when layoffs have surged across the economy, claims have surged with them — including during the recessions after the financial crisis and the pandemic. The absence of such an increase now is hard to dismiss.
• Other data tells a similar story: Announced job cuts fell 20% from a year earlier in September, according to outplacement firm Challenger, Gray & Christmas.

The bottom line: Employers may be reluctant to hire, but they appear just as reluctant to fire — an unusual combination that, for now, keeps the labor market on steady footing.