WASHINGTON (NEWSnet/AP) — The Federal Reserve faces a cooling job market as well as persistently high prices, Chair Jerome Powell said in testimony Tuesday.

The remarks suggest that the Fed is moving closer to moving closer to cutting interest rates. They happened as Powell addressed the Senate Banking Committee on his first of two days of semi-annual testimony to Congress. On Wednesday, he will testify to the House Financial Services Committee.

The Fed has made “considerable progress” toward its goal of defeating the worst inflation spike in four decades, Powell told the senators. While it remains above the central bank’s 2% target, inflation has “eased notably” in the past two years, he said.

He did explain that inflation is not the only risk factor. Cutting interest rates too little, or too late, Powell said, could have a weakening affect on economic activity and employment.

During the time frame of March 2022 to July 2023, the Fed raised its benchmark interest rate 11 times, ending at 5.3%, in an effort to fight inflation, which peaked two years ago. Those hikes increased the cost of consumer borrowing by raising rates for mortgages, auto loans and credit cards, among other forms of borrowing. The goal was to slow borrowing and spending and cool the economy.

In the past, Powell and other Fed policymakers have repeatedly stressed that the economy’s strength and low unemployment rate meant they could be patient about cutting rates and wait to ensure that inflation was truly in check.

But on Tuesday, Powell said the job market has “cooled while remaining strong.”

And he added that the economy’s growth has moderated after a strong expansion in the second half of last year. Last week, the government reported that hiring remained solid in June, though the unemployment rate rose for a third straight month to 4.1%.

Investors have put the likelihood of a Fed rate cut in September at about 76%, according to CME FedWatch, up from just 50-50 a month ago.

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