The Federal Reserve is “not far” from having the confidence to start cutting interest rates, its chair Jay Powell has said, bolstering hopes that the central bank will lower borrowing costs in the coming months.
Powell told US senators on Thursday that the Federal Open Market Committee was “in the right place” on monetary policy while it waited for proof that almost two years of higher rates had tamed inflation.
“We’re waiting to become more confident that inflation is moving sustainably to 2 per cent,” the Fed chair said, referring to the central bank’s official inflation target. “And when we do get that confidence, and we’re not far from it, it will be appropriate to dial back the level of restriction so that we don’t drive the economy into recession.”