Federal Reserve Chair Jerome Powell reiterated a firm stance on the central bank's monetary policy path on Wednesday, indicating that while inflation is moderating, it hasn't cooled enough to justify rate cuts.

Testifying before the House Financial Services Committee after addressing the Senate Banking Committee on Tuesday, Powell hinted that further progress is needed to reach the Fed's 2% inflation target.

“Today’s inflation print shows we’re close but not there yet,” Powell said, referencing the latest Consumer Price Index report, which showed annual inflation at 3%, slightly above forecasts of 2.9%.

Core inflation, which excludes food and energy, also ticked up more than expected to 3.3%, signaling persistent price pressures.

The “the CPI reading was above almost every forecast,” Powell said, yet he urged patience.

“We don't get excited about one or two good readings, and we don't get excited about one or two bad readings.”

The Fed primarily focuses on Personal Consumption Expenditures inflation, which he described as a “better measure of inflation.”

“Tomorrow we'll get the producer price index… we'll actually know what the PCE readings are late tomorrow,” he added.

Powell Chills Rate Cut Hopes, Flags Tariff, Fiscal Concerns

When asked at what level of inflation he would consider cutting interest rates, Powell declined to specify, saying, “We didn't make much progress on core CPI. I'm not putting a specific number. We have the luxury to wait.”

Powell made it clear the Fed intends to keep policy restrictive, reinforcing the central bank's reluctance to cut rates prematurely.

On tariffs, Powell said that “it is possible that the Fed would have to move the policy rate,” hinting at the economic impact of potential Trump-related trade policies.

He also stressed concerns over the U.S. fiscal outlook, noting the country is running “a very large deficit at a time of very low unemployment,” calling the debt path “unsustainable” and urging both political parties to address the issue.

Powell raised concerns about market stability, saying, “I’ve been somewhat concerned about Treasury liquidity.”

On long-term economic growth prospects, he suggested taking a cautious approach, stating: “If we are talking about long-term budget assumptions, I’d be conservative and say 2% real growth. It’s doable.”

Despite growing speculation about political pressures, Powell reaffirmed his commitment to his role, saying there are “no changes” to his stance that he will not resign if asked to do so by President Donald Trump.

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Fed Chair Jerome Powell illustration created using artificial intelligence via Midjourney.