Powell, Waller Signal Rate Cuts Amid Inflation Optimism

Federal Reserve officials, including Chair Jerome Powell and Governor Christopher Waller, indicated growing confidence that inflation is heading towards the 2% target, potentially paving the way for interest rate cuts. Powell highlighted that recent favorable inflation data boosts confidence but emphasized decisions would be data-dependent and made meeting-by-meeting. Waller echoed similar sentiments, stating that while progress is encouraging, more sustained evidence is needed. IMF Chief Economist Pierre-Olivier Gourinchas suggested the Fed can afford to wait for more data due to the strong labor market. Markets are increasingly betting on a rate cut as early as September, though Powell refrained from signaling specific timings. The labor market remains robust, contributing to the cautious optimism among Fed officials.