Stock market today: S&P 500, Nasdaq close at record highs as Powell touts inflation progress

On Tuesday, Federal Reserve Chair Jerome Powell spoke publicly for the first time since the Fed’s preferred inflation gauge showed a slowdown in May. The gauge, known as the “core” Personal Consumption Expenditures (PCE) index, rose 2.6% in May, down from 2.8% in April. This data indicates a slowing inflation rate, which Powell found encouraging.

However, Powell emphasized that the central bank will need to see more evidence before considering a cut in interest rates. He stated that the recent inflation readings suggest a return to a disinflationary path, but the Fed needs to confirm this trend before taking any action.

Powell’s comments were made at a European Central Bank conference in Portugal. His remarks came days after the latest inflation reading, which offered new support for potential rate cuts later this year. Despite the positive signs of easing inflation, the central bank is not expected to cut rates at its next meeting in late July.

Powell also declined to answer a question about a potential rate cut as early as September. Instead, he emphasized the need for more time and evidence that inflation is moving sustainably down to the Fed’s 2% target. He noted that the strong job market is cooling gradually, allowing the central bank to be patient in its decision-making process. Powell concluded by stating, “We’ve made a lot of progress. We just want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation.”

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