Powell signals two Fed rate cuts as inflation cools and labor market holds firm

Federal Reserve Chair Jerome Powell said the central bank is increasingly likely to cut interest rates twice this year, pointing to slower inflation and a labor market that remains stable. His remarks suggest policymakers believe they have more room to ease borrowing costs without reigniting price pressures.

Powell’s comments reflect a shift in the Fed’s outlook after a prolonged period of restrictive policy aimed at bringing inflation down. While officials still want clearer evidence that price growth is fully under control, the latest signals indicate confidence that the economy can absorb modest rate reductions.

The Fed’s next moves will be closely watched by households, businesses and financial markets, all of which have been affected by higher borrowing costs over the past two years. Any cuts would likely be aimed at supporting growth while avoiding a renewed surge in inflation.

The timing and pace of easing will depend on upcoming data, especially readings on prices, employment and consumer demand. For now, Powell’s message points to a central bank preparing to move cautiously toward a less restrictive stance.