The chairman of the Federal Reserve says the time has come to start cutting a key interest rate from its current level.
"My confidence has grown that inflation is on a sustainable path back to 2 percent," Jerome Powell said in remarks at the Fed's annual economic conference in Jackson Hole, Wyoming.
He said, "The time has come."
The Fed meets again next month and is widely expected to cut its benchmark rate a quarter point. That rate is tied to a variety of consumer loans and is currently at a 23-year high.
The Fed quickly started raising inflation rates in an effort to tame inflation, which skyrocketed after the coronavirus pandemic created supply chain issues and rising demand as the economy widely reopened.
The board aims to keep inflation at about 2%. Powell noted that it has dropped to about 2.5% this year after peaking at more than 7% in 2022.
He also said the economy is still growing, but there are signs that it is softening.
"Cooling in labor market conditions is unmistakable," Powell noted.
But he says the growth in the unemployment rate is due more to a growing number of people jumping back into the labor market and not because of rising layoffs.
Markets rallied on the signal that rate cuts are on the way. The Dow Jones Industrial Average was up more than 250 points in afternoon trading on Friday.
