Powell Cautions on Rate Cuts as Inflation Remains Above Fed Target
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Federal Reserve Chair Jerome Powell signaled a cautious stance on interest rate cuts, saying inflation has eased but remains above the central bank’s 2% target. In a speech, Powell said the Fed must see more evidence that price pressures are moving sustainably lower before easing policy too quickly.
He also pointed to the strength of the labor market as a key factor in the Fed’s decision-making, noting that officials will continue to assess whether employment conditions remain resilient. Powell added that geopolitical risks could complicate the outlook, reinforcing the need for a measured approach.
His remarks came as investors continued to weigh the timing of the Fed’s next move. Following the speech, markets priced in roughly a 75% chance of a rate cut in December, suggesting traders still expect policymakers to begin lowering borrowing costs later this year.
The US dollar index edged down slightly to 103.80 after the comments, reflecting modest market reaction to Powell’s signals. While the Fed has made progress in bringing inflation down from its peak, Powell’s message underscored that officials are not yet ready to declare victory over rising prices.
