Fed Chair Powell Hints Possible Rate Cuts Amid Improving Inflation

In congressional testimony, Fed Chair Jerome Powell acknowledged that inflation remains above the 2% target but has shown signs of improvement. He hinted that further good data could justify interest rate cuts. The Fed also expressed concerns about economic risks if rates stay too high for too long.

In a congressional testimony on Tuesday, Federal Reserve Chair Jerome Powell stated that while inflation remains above the Fed's 2% target, it has shown improvement in recent months. He noted that more positive data could justify interest rate cuts, signaling increased faith in the Fed's ability to control inflation.

Powell's comments highlighted a shift from earlier in the year, where progress on inflation seemed stagnant. Now, the Fed is more confident that price pressures will ease. However, Powell cautioned that prolonged high rates could pose risks to the job market and overall economy.

The stock market showed little change following Powell's remarks, with the S&P 500 inching up by 0.2%. U.S. Treasury yields saw slight increases, and the dollar index rose to 105.08. Economists voiced varying opinions, with some expecting rate cuts as early as September.

(With inputs from agencies.)