The Federal Reserve faces a cooling job market as well as persistently high prices, Chair Jerome Powell said in written testimony Tuesday, a shift in emphasis away from the Fed’s single-minded fight against inflation that suggests it's moving closer to cutting interest rates. The Fed has made “considerable progress” toward its goal of defeating the worst inflation spike in four decades, Powell said in testimony to the Senate Banking Committee. “Inflation has eased notably” in the past two years, he added, though it remains above the Fed’s 2% target. Powell pointedly noted that “elevated inflation is not the only risk we face.” Cutting rates “too late or too little could unduly weaken economic activity and employment,” he said.
