The Federal Reserve faces a cooling job market as well as persistently high prices, Chair Jerome H. Powell said in testimony Tuesday to Congress, a shift in emphasis away from the Fed's single-minded fight against inflation of the last two years that suggests it is 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 told the Senate Banking Committee.
But his testimony will probably harden investors' and economists' expectations that the first reduction will come at the central bank's September meeting. “It doesn’t seem likely that the next policy move would be a rate increase,” Powell said in response to a question from Sen. Jack Reed, a Rhode Island Democrat. “As we make more progress on inflation ... we begin to loosen policy at the right moment.