Fed Chair Jerome Powell Signals Confidence in Inflation Control, Hints at Possible Interest Rate Cuts

Fed Chair Jerome Powell indicated optimism about inflation returning to the 2% target during his congressional testimony. He highlighted recent improvements in price stability and mentioned the Fed's concerns about potential economic risks if interest rates remain high for too long. Powell's comments might influence future policy changes.

In a congressional testimony, Fed Chair Jerome Powell expressed confidence that inflation will return to the Federal Reserve's 2% target, citing recent data as evidence of progress. He stressed that central bank interest rate cuts could be on the horizon if positive trends continue.

Powell drew comparisons between early-year stagnation and recent improvements, which bolster the belief that inflationary pressures are easing. He also highlighted the potential risks to the job market and the broader economy should interest rates stay elevated for an extended period.

The upcoming consumer price report for June and a recent jobs report showing a rise in unemployment to 4.1% will be key factors in the Fed's next steps. Given these metrics, Powell's testimony sets the stage for possible policy adjustments after the upcoming July meeting, with market analysts predicting a rate cut in September.

(With inputs from agencies.)