Federal Reserve Chair Jerome Powell said Tuesday the central bank doesn’t “need to be in a hurry” to resume its interest rate cutting campaign, noting officials reduced the rate significantly last year and the economy remains sturdy.

“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said in testimony before the Senate banking committee.

His remarks echo those he made at a news conference in January after the Fed left its key short-term interest rate unchanged. The Fed next meets in March.

How many rate cuts were there in 2024?

After hiking its key interest rate to a 23-year high of 5.25% to 5.5% in 2022 and 2023 to tame a pandemic-induced inflation surge, the Fed cut the rate by a total percentage point at three meetings late in 2024, citing slowing consumer price increases.

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The Fed’s preferred annual inflation measure has fallen from a peak of 5.6% to 2.8%.

“Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2% longer-run goal,” Powell said.

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What is the inflation rate today?

With the Fed's preferred annual inflation measure stuck at about 2.8% since fall, plus the economy performing well and President Donald Trump’s economic policies generating uncertainty about the outlook, the Fed left rates unchanged in late January and has signaled the pace of rate cuts would slow this year.

How is the US economy doing now?

“The economy is strong overall and has made significant progress toward our goals over the past two years,” Powell said in his prepared testimony. “Labor market conditions have cooled from their formerly overheated state.”

After the pandemic, the job market was beset by widespread labor shortages and employers were raising wages sharply to attract workers. That, along with supply chain troubles, helped fuel the inflation run-up.

Yet the labor market has been healthy. Powell noted payroll gains have averaged 189,000 a month the past four months and unemployment was at 4% in January. That’s an eight-month low. The economy, he added, grew 2.5% from the fourth quarter of 2023 to the fourth quarter of 2024, "bolstered by resilient consumer spending." That amounts to healthy growth.

In his prepared testimony, Powell didn’t mention Trump’s trade and immigration policies. At recent news conferences, he said some Fed officials have factored Trump’s plans into their forecasts for the economy, inflation and interest rates but it’s too early to know what the effects will be.

Trump is slapping tariffs on imports from China and other countries and deporting what could be millions of immigrants who lack permanent legal status. Most of the import levies likely would be passed by companies to consumers through higher prices, while the immigration crackdown probably would constrain the labor supply, driving up wages that also set off price increases, Moody’s Analytics has said.

"We've seen proposals but it's so hard to say what will happen," Powell told lawmakers Wednesday when asked if the tariffs will mean higher consumer prices. "The question is how persistent it would be and how targeted it would be."

Higher prices, he added, represent "a possible outcome" but it "depends specifically on what's being tariffed, for how long, etc."

Manufacturers, retailers and parts suppliers could absorb at least part of any tariff costs in their profits.

How much is the Fed expected to cut rates?

In December, Fed officials forecast they would reduce their benchmark interest rate twice this year, down from the four rate cuts they had predicted in September. Futures markets also are betting on two decreases. The Fed isn't expected to reduce its federal funds rate at a mid-March meeting.

Powell acknowledged the Fed's neutral interest rate - which theoretically would neither stimulate nor slows economic growth - has increased. That could mean the central bank doesn't have to reduce interest rates as much before halting.

The neutral rate was near zero after the Great Recession and modestly above 2% during the pandemic in 2020. In its December forecast, Fed officials pegged the long-run rate at 3%.

"I think it's moved up and many of my colleagues feel the same way," Powell said.

Yet Powell reiterated Tuesday the Fed faces risks in lowering rates too soon as well as too late.

“We know that reducing policy restraint too fast or too much could hinder progress on inflation,” Powell said. “At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.”

What is the main reason the Federal Reserve raises and lowers interest rates?

The Fed cuts rates to juice a sputtering economy by reducing borrowing costs or to bring them back to normal as inflation eases. It raises rates or keeps them high to wrestle down inflation.

Powell also said in his remarks that the Fed will conduct a periodic review of its interest rate strategy this year but won't consider changing its 2% inflation goal.

What's going on with CFPB?

Several Democratic committee members sharply assailed the Trump administration's decision this week to effectively shutter the Consumer Financial Protection Bureau. Since the financial crisis, the agency has monitored large banks to ensure they're not harming Americans in credit card, checking account, mortgage and other consumer finance matters.

"For me, I'd be really worried about doing business with a large bank when there's no cop on the beat," said Sen. Elizabeth Warren, D-Mass.

Sen. Chris Van Hollen, D-Md., said the agency has overseen "the fraudsters and scammers that cheat Americans out of their hard-earned money."

Powell acknowledged that "no other federal regulator" is monitoring banks with more than $10 billion in assets, noting the Fed oversees smaller banks.

Republicans on the panel pointed out that consumers can still file complaints with state attorneys generals or federal banking agencies.

Warren, though, said no other agency is conducting periodic examinations of the nation's largest banks.

(This story has been updated with new information.)