Federal Reserve Chair Jerome Powell indicated that the Fed is increasingly confident that inflation is on track to return to its 2% target. Powell stated that the Fed would consider cutting interest rates before inflation actually reaches that level, with most economists expecting the first rate cut to occur in September. The recent decline in consumer prices and core prices suggest that inflation is slowing, prompting more optimism within the Fed about rate cuts. Powell emphasized that waiting for inflation to hit 2% before taking action would likely be too late, as it takes time for the Fed's policies to impact the economy. Additionally, the recent cooling of drivers of price acceleration, such as rental and housing costs, along with a slowdown in hiring and job openings, further supports the Fed's confidence in managing inflation. Overall, the Fed's cautious approach to rate cuts reflects a balance between addressing inflation concerns and supporting economic growth.