Jerome H. Powell, the chair of the Federal Reserve, stated on Friday that resilient financial progress is giving the central financial institution the pliability to be affected person earlier than slicing rates of interest.

Fed officers raised rates of interest sharply from early 2022 to mid-2023, they usually have left them at about 5.3 % since final July. That comparatively excessive degree primarily faucets the brakes on the economic system, partially by making it costly to borrow to purchase a home or begin a enterprise. The purpose is to maintain charges excessive sufficient, for lengthy sufficient, to wrestle inflation again underneath management.

However worth will increase have cooled notably in latest months — inflation ran at 2.5 % in February, a report on Friday confirmed, far beneath its 7.1 % peak in 2022 for that gauge and simply barely above the Fed’s 2 % purpose. On condition that slowdown, officers have been contemplating when and the way a lot they’ll lower rates of interest this yr.

Whereas buyers have been initially hopeful that price cuts would come early within the yr and be substantial, Fed officers have lately struck a cautious tone, sustaining that they need better confidence that inflation was underneath management. Mr. Powell reiterated that message on Friday.

“We will, and we shall be, cautious about this resolution — as a result of we will be,” Mr. Powell stated, talking in a question-and-answer session with the “Market” host Kai Ryssdal in San Francisco. “The economic system is robust: We see very sturdy progress.”

Friday’s Private Consumption Expenditures report confirmed that buyers are nonetheless spending at a fast clip. Current hiring information has additionally remained strong. In all, the economic system appears to be holding up even with the Fed’s excessive rates of interest.

“That signifies that we don’t have to be in a rush to chop,” Mr. Powell stated. “It means we will wait and turn into extra assured that, actually, inflation is coming all the way down to 2 % on a sustainable foundation.”

The Fed is making an attempt to stability two dangers: On one hand, officers don’t wish to maintain rates of interest too excessive for too lengthy, risking an pointless recession. On the opposite, they don’t wish to lower rates of interest too early, earlier than inflation is absolutely underneath management.

If excessive inflation lingers for years on finish, it may well turn into embedded within the economic system as folks and firms alter their habits, making it even more durable to stamp out in the long term.

Traders at the moment count on that the Fed would possibly start reducing charges in June. Fed officers projected final week that they have been prone to make three quarter-point price cuts earlier than the tip of this yr.

Whereas the economic system seems sturdy for now, Mr. Powell recommended that if the job market started to point out indicators of cracking, the Fed would possibly react.

“If we have been to see surprising weak spot within the labor market,” Mr. Powell stated, “then that’s one thing we might be taking a look at rigorously, and will draw a response as effectively.”

The Fed chair stated that whereas there may be all the time an opportunity of a recession, he didn’t assume that the danger was excessive in the meanwhile.

“There’s no cause to assume that the economic system is in a recession or is on the edge of 1,” Mr. Powell stated.

“However — humility,” he added.

And Mr. Powell repeatedly alluded to the elephant within the room because the nation barrels towards November’s presidential election: the politics of rate of interest cuts. There’s a danger that the central financial institution might be criticized for slicing borrowing prices within the run-up to the election, since doing so may help markets and the economic system and will be perceived as favoring the incumbent.

Former President Donald J. Trump, the presumptive Republican nominee, has already criticized the Fed for being political and stated that Mr. Powell was “going to do one thing to most likely assist the Democrats.” Mr. Trump first elevated Mr. Powell to the function of Fed chair, although he has since been reappointed to the function by President Biden.

The Fed is impartial of the White Home, and its officers stress that they set coverage with an eye fixed on the economic system, not politics. Mr. Powell didn’t particularly reference Mr. Trump’s feedback, however he did reiterate the Fed’s dedication to independence on Friday.

“Integrity is all the things,” Mr. Powell stated. “We’re working to serve all People, not any specific set of People or political events or leaders.”