01:36 PM EDT, 07/09/2024 (MT Newswires) -- Inflation in the US seems to have improved in recent months, and "more good data would strengthen" the case for potential monetary policy easing, Federal Reserve Chair Jerome Powell said Tuesday in congressional testimony.

In a bid to combat inflation, the central bank's Federal Open Market Committee increased its benchmark lending rate by 525 basis points from March 2022 through July 2023, but has since kept interest rates unchanged, with its latest pause coming last month. The FOMC's Summary of Economic Projections on June 12 indicated just one rate cut this year, down from the three forecast in March.

"The committee has stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%," Powell said Tuesday in prepared remarks to the Senate Committee on Banking, Housing, and Urban Affairs. Although first-quarter inflation data didn't support "such greater confidence," the most recent readings have indicated some modest further progress, he said.

Total personal consumption expenditure prices increased 2.6% over the 12 months ended May, while the core measure -- which excludes the volatile food and energy components -- also showed a similar growth rate, both above the FOMC's target, Powell said. Payroll growth averaged 222,000 jobs a month in the first half of the year, while the unemployment rate stood at "a low level of" 4.1% in June, according to Powell.

Economic growth, as measured by gross domestic product, seems to have moderated in the first half of 2024 after showing "impressive" strength in the second half of last year, Powell said. "Private domestic demand remains robust, however, with slower but still-solid increases in consumer spending."

"We know that reducing policy restraint too soon or too much could stall or even reverse the progress we have seen on inflation," he said. "Reducing policy restraint too late or too little could unduly weaken economic activity and employment."

Powell is scheduled to appear before the House Financial Services Committee Wednesday.

Government data are likely to show Thursday that US consumer inflation rose 0.1% sequentially and 3.1% annually last month, according to a Bloomberg-compiled consensus. Official producer prices data for June are scheduled to be released Friday.

Markets are widely expecting policymakers to again hold interest rates steady July 31, while the probability of a 25-basis-point cut in September stands at 70%, according to the CME FedWatch.