Federal Reserve Chair Jerome Powell addressed the Senate Banking Committee on Tuesday as part of his semiannual address to Congress on monetary policy and suggested that the Fed is paying close attention to when to cut rates. He also emphasized that officials are continuing to make decisions on a meeting-by-meeting basis.
“At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said.
Following his statement, the S&P 500 hit another high, reaching 5,586 points with a 0.25% jump on Tuesday afternoon. The Dow Jones Industrial Average dropped 0.06% to 39,322 points, while the tech-heavy Nasdaq $NDAQ rose 0.32% to 18,462 points.
The Fed chair seemed content as the economy has significantly reduced inflation and improved the job market. However, he emphasized that the 2% inflation rate target remains, but more data is needed before any further decisions can be made.
“We know that reducing policy restraint too soon or too much could stall or even reverse the progress we have seen on inflation,” he said. He added that maintaining price stability is crucial for achieving optimal employment and steady prices in the long term.
Powell will resume his testimony on Wednesday before the House Financial Services Committee.
Powell’s address to Congress on monetary policy has put the spotlight on the upcoming inflation data, scheduled for release on Thursday. Investors eagerly await the data, as it will determine the Fed’s timing and extent of potential interest rate cuts.