Federal Reserve Chairman Jerome Powell on Tuesday expressed satisfaction with the progress in inflation over the past year, but added that he wants to see more before cutting interest rates.
"We have made good progress in reducing inflation to the target," he said at the Central Banks Forum in Sintra, Portugal.
"The latest reading, and the one before it to a lesser extent, suggests that we are back on the path to disinflation." We want to be more confident that inflation is sustainably falling towards 2 percent before we start easing policy," the Fed chief added.
Jerome Powell spoke at the forum, which also includes European Central Bank President Christine Lagarde and Brazilian Central Bank Governor Roberto Campos Neto.
While the Fed chief said he sees progress on inflation, he worries he may be taking a step too soon and could threaten price growth, which two years ago hit its fastest pace since the early 1980s.
"We know full well that if we go too soon, we can undo good work." If we do it too late, we could unnecessarily harm the recovery and expansion," Jerome Powell emphasized, adding that the risks of acting too late or too soon have balanced out this year as inflation has eased and the economy and labor market have remained strong.
At the start of the year, market participants expected at least six Fed rate cuts of a quarter percentage point each. However, expectations have adjusted significantly since then and two cuts are now forecast, one in September and the other before the end of this year. Meanwhile, Fed members see just one cut this year, according to a recent poll.
Asked if he thought the Fed might cut interest rates in September, Jerome Powell said: "I'm not going to talk about any specific dates here today."