Federal Reserve chair Jerome Powell said Monday that the United States is set to see inflation cool further towards policymakers' target, with interest rates likely to decrease over time.
"Disinflation has been broad-based, and recent data indicate further progress toward a sustained return to two percent," Powell said at the National Association for Business Economics annual meeting in Tennessee.
"Broader economic conditions also set the table for further disinflation," the Fed chair added.
Jerome Powell's speech comes over a week after the Federal Reserve slashed interest rates by half a percentage point, marking its first reduction since 2020. The move was made in response to easing inflation.
Federal Reserve chair Jerome Powell also signalled that further rate cuts are in the pipeline if there are no significant surprises, news agency AFP reported.
"Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance," Powell said.
He stressed policymakers were not on a "preset course" and would assess incoming data as they mulled further cuts.
The Fed can quickly lower rates if the economy slows more than anticipated.
"This committee is not in a rush to cut rates quickly," Powell stated at the National Association for Business Economics conference, despite the Federal Open Market Committee initiating its easing cycle with a surprise half-percentage-point cut at its September 17-18 meeting.
"We'll adjust our pace as needed," Powell added, emphasizing the importance of steering inflation towards the Fed's 2% target while keeping unemployment low.
Powell noted that revisions to government reports on Gross Domestic Income (GDI) have alleviated "downside risk to the economy and indicate that spending can remain robust."
GDI, an alternative measure of economic growth based on income rather than output, had previously raised concerns among Fed officials about weaker-than-expected output. However, the two measures converged following an upward revision to GDI estimates.
"The economy is in solid shape," Powell affirmed.
-With inputs from agencies
