Fed chair hints that rate cuts could come soon as job market begins to cool

    The Federal Reserve faces a cooling job market as well as persistently high prices, Chair Jerome Powell said in written testimony Tuesday, a shift in emphasis away from the central bank’s single-minded fight against inflation of the past two years. Powell’s words suggest the Fed may be moving closer to cutting interest rates.

    The Fed has made “considerable progress” toward its goal of defeating the worst inflation spike in four decades, Powell said in his testimony to the Senate Banking Committee.

    “Inflation has eased notably” in the past two years, he added, though it still remains above the central bank’s 2% target.

    Powell pointedly noted that “elevated inflation is not the only risk we face.” Cutting rates “too late or too little could unduly weaken economic activity and employment,” he said.

    The Fed chair is addressing the Senate panel on the first of two days of semi-annual testimony to Congress. On Wednesday, he will testify to the House Financial Services Committee.

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