01:38 PM EST, 03/06/2024 (MT Newswires) -- It would "likely be appropriate" for the Federal Reserve to start lowering its benchmark lending rate at some point in 2024, though continued progress in achieving its inflation target is not guaranteed amid macro uncertainty, Fed Chair Jerome Powell said Wednesday.

In a bid to tame inflation, the central bank's Federal Open Market Committee tightened monetary policy by 525 basis points from March 2022 through July 2023. It has held interest rates steady since then.

"If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year," Powell said in his semi-annual Congressional testimony before the House of Representatives on Wednesday. However, the economic outlook is "uncertain, and ongoing progress toward our 2% inflation objective is not assured."

Powell said that although inflation has "eased notably" over the last 12 months, it continues to be above the FOMC's target. Total personal consumption expenditure prices increased 2.4% over the 12 months ended January, while core prices -- which exclude the volatile food and energy components -- grew 2.8%, according to Powell.

Cutting interest rates too soon or by too much could reverse the FOMC's progress on the inflation front and eventually require more hikes to lower price growth back to 2%, Powell said. On the other hand, easing monetary policy too late or by too little "could unduly weaken" employment and economic activity, he added.

"In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks," Powell said. "The committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%," he added, reiterating the FOMC's statement released after its January meeting.

Powell is scheduled to deliver his testimony before the Senate on Thursday.

"Capitulating to the Fed's pushback against expectations for a near-term rate cut, investors now anticipate the first-round reduction in June (as opposed to March) with three to four cuts by year-end, down from an earlier forecast of six cuts," Stifel Chief Economist Lindsey Piegza and Economist Lauren Henderson said in a Wednesday note.

Although the market's downgraded rate cut-expectations are now better aligned with the FOMC's December projections, they may "still be overly optimistic" given the uneven nature and recent rise in inflation, Stifel said.

The next FOMC meeting is scheduled for March 19-20.