Powell said he is looking to see continued “confidence on inflation” coming down and a “solid labor market,” along with overall healthy economic data.
“If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September,” he told reporters.
Powell’s comments came after the Fed held rates steady at a range of 5.25 to 5.5 percent Wednesday, as markets expected.
Inflation has continued to fall over the summer, but not quickly enough to spur the central bank to ease monetary policy.
After falling from its peak around 9 percent in June 2022 and hovering above 3 percent for the last year, inflation finally dipped into the 2-percent range year-over-year in June and deflated 0.1 percent from May.
The June jobs report from the Labor Department revealed weaker employment levels behind recent price data, revising the number of jobs added to the economy in April and May to reflect 111,000 fewer jobs than previously reported.
The unemployment rate also ticked above 4 percent since 2021.
“We’ve seen one quarter of good inflation, and we’ve seen the labor market move quite a bit. And as I mentioned, I don’t think it needs to cool off any more for us to get the inflation results that are related to the labor market. Not all inflation is, of course,” Powell said.
The Hill’s Tobias Burns has more here.
