# Fed's Powell Opens Door to Rate Cut in September
Federal Reserve Chair Jerome Powell signaled the central bank is ready to lower interest rates as early as September if inflation continues cooling. Powell made the statement after recent data showed progress on price pressures, giving markets confidence that the rate-hiking cycle has ended.
The Fed has held rates at a two-decade high of 5.25 to 5.50 percent since July 2023. Inflation has fallen from its 2022 peak but remains above the Fed's 2 percent target. Powell's comments suggest officials believe they have done enough tightening to prevent the economy from overheating while giving borrowers relief.
Market reaction was swift. Stock indexes rose on expectations that cheaper borrowing costs would soon arrive. Bond yields fell as traders bet on lower rates ahead.
A September rate cut remains conditional. Powell emphasized the Fed will watch incoming inflation data and employment reports before making a final decision. One weak jobs report or a spike in prices could delay cuts into late 2024.
Mortgage rates, credit card rates, and auto loan rates typically follow Federal Reserve decisions with a lag. Lower Fed rates often translate to cheaper borrowing for consumers within weeks. Savers holding cash in money market accounts or savings accounts would see returns decline as banks lower deposit rates.