US Fed Chair Jerome Powell Hints at Big Rate Cut in September: 'Inflation Falling, Unemployment Faces Risks'

The Fed chief acknowledged recent progress on inflation, which has resumed moderating in recent months after stalling earlier in the year: “My confidence has grown that inflation is on a sustainable path back to 2%,” he said, referring to the central bank’s inflation target.

Treasury yields fell and the S&P 500 index of US stocks rose while the dollar declined.

Swaps traders held roughly steady in their pricing, with the total rate cuts they foresee through the end of 2024 at about 102 basis points. Odds also remained steady for a quarter-point cut in September, and the probability of a 50-point cut rising slightly to 24%.

While the remarks provided some clarity for financial markets in the near term, they offered few clues as to how the Fed might proceed after its September gathering.