Powell Signals Possible Rate Cut as Inflation Moves Closer to Fed Target

Federal Reserve Chair Jerome Powell said recent economic data suggests inflation is moving closer to the central bank’s 2% target, raising the possibility of interest rate cuts as soon as the next policy meeting. Speaking 45 minutes ago, Powell’s remarks reinforced expectations that the Fed may soon begin easing monetary policy if disinflation continues.

Markets reacted quickly to the prospect of lower borrowing costs. U.S. stocks rallied, with the S&P 500 rising 1.2% and the Nasdaq climbing 1.5% as investors shifted into risk assets. The move reflected growing confidence that the Fed could soon pivot away from its restrictive stance after an extended period of elevated rates.

The U.S. dollar weakened against major currencies following the speech, a sign that traders are adjusting to the possibility of a less aggressive interest-rate environment. In digital assets, Bitcoin advanced above $68,000, supported by the broader risk-on tone across financial markets.

Powell’s comments did not amount to a formal policy commitment, but they marked one of the clearest signals yet that the Fed is preparing for a possible rate cut if inflation continues to cool. Investors will now focus on upcoming economic releases and the next Federal Open Market Committee meeting for confirmation of the central bank’s next move.