The US Federal Reserve Chair Jerome Powell confirmed on Friday that the central bank was ready to cut interest rates soon, citing progress in combating inflation.

In a keynote speech at the Fed’s annual meeting in Jackson Hole, Wyoming, Powell said the central bank was finally in a position to shift its focus after short-term borrowing costs fell to their highest levels in more than two decades. He did not specify the timing or size of the planned rate cuts.

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“It is time to adjust policy,” Powell said in his remarks Friday morning. “The direction is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the allocation of risks.”

Powell laid the groundwork for interest rate cuts at the end of 2024 on July 31, when the Fed paused They met for the eighth consecutive time and in a post-meeting press conference he said economic conditions would allow for a rate cut. The Fed’s next meeting is scheduled for September 18.

The Fed chairman has repeatedly stressed that inflation must first be brought onto a sustainable path toward the Fed’s 2 percent target before interest rate cuts can take place. On Friday, Powell pointed to progress in the fight against inflation and noted that prices have risen Datacompared to a peak of 7 percent two years ago.

“Inflation has fallen significantly,” Powell said. “The labor market is no longer overheated and conditions are now less tight than before the pandemic.”

The markets reacted positively to Powell’s speech with the Dow Jones Industrial Average In late morning trading it rose by almost 400 points.

If the Fed cuts rates on September 18, it would be the first rate cut since cutting 100 basis points to 0-0.25 percent on March 16, 2020, at the start of the COVID-19 pandemic. The Fed raised rates in 11 of 12 meetings between March 2022 and July 2023, raising rates to 5.25-5.5 percent.

Shortly after the last Fed meeting, a report was published by the US Department of Labor Unemployment rose 4.3 percent from 4.1 percent, marking the highest level since October 2021. This prompted the commercial real estate industry to prepare for a potential Interest rate cut in September by half a percentage point instead of a quarter. Office of Labor Statistics has since released data showing that the US economy lost 818,000 fewer From March 2023 to March, more jobs were created than previously recorded.

Nigel GreenCEO and founder of an asset management firm deVere Groupsaid on Friday after Powell’s speech that the Fed should cut interest rates by 50 basis points in September, expressing concern that failure to do so could lead to a recession.

“A small cut could signal a turnaround, but it will not provide the jolt needed to prevent a potential hard landing,” Green said in a statement. “It’s time for the Fed to act boldly, cut rates aggressively and send a clear message that it is willing to do whatever it takes to keep the U.S. economy on track.”

​You can reach Andrew Coen at [email protected]