Fed Chair Jerome Powell reiterated in the Semiannual Monetary Policy Report to Congress that Fed is not in a hurry to cut interest rates.
A prolonged policy hold remains on the table if inflation does not continue its downward trend. However, he also acknowledged that if the labor market weakens or disinflation accelerates, Fed could respond with further easing.
Powell noted that if inflation fails to make sustained progress toward the 2% target, Fed can “maintain policy restraint for longer.” On the flip side, if the labor market weakens unexpectedly or inflation declines more rapidly than forecast, Fed “can ease policy accordingly.”
