Powell: US making modest progress in curbing inflation

U.S. Federal Reserve Chairman Jerome Powell says the central bank is making modest progress in fighting inflation.

Testifying before the Senate Banking Committee on Tuesday, Powell said the latest data suggest there has been "some modest progress" in inflation since the first quarter of this year.

Powell also said in prepared remarks that "more good data will strengthen our confidence that inflation is moving toward our 2 percent objective."

When prices spiked after the coronavirus pandemic, the Fed responded by raising interest rates to a 20-year high in an attempt to cool the US economy and bring inflation back to its long-term target of 2%.

Inflation peaked in 2022 and has since slowed significantly, but progress stalled in the first quarter of this year. The more encouraging figures for the second quarter have prompted some policy makers to express cautious optimism in recent weeks.

Analysts widely expect the Fed to hold rates steady again when it meets later this month, but could start cutting rates in September.

Futures traders are pricing in a more than 75% chance that the Fed will cut rates for the first time in September.