Key points from Jerome Powell's speech before the US Senate Banking Committee:
Powell said he doesn't expect an interest rate hike anytime soon, but declined to specify the exact timing of a possible cut. "I'm not going to give any signals about the timing of future actions."
The chairman of the Fed stressed the importance of a cautious approach to avoid risks to the economy associated with premature or delayed actions. He noted that all decisions will be made gradually, based on current data, with the possibility of a rate reduction in September.
The latest inflation data suggest gradual progress, and positive results could bolster confidence that inflation will return to the 2% target. Powell also noted that unexpected weakness in the labor market could be a reason to lower rates.
Despite some slowing of the economy and cooling of the labor market, the unemployment rate remains low by historical standards. Powell emphasized that the US economy remains one of the strongest in the world.
Markets reacted mutedly as Powell avoided giving clear signals about the Fed's short-term policy.