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 reducing 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 p.c since final July. That comparatively excessive stage primarily faucets the brakes on the economic system, partly 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 current months — inflation ran at 2.5 p.c in February, a report on Friday confirmed, far beneath its 7.1 p.c peak in 2022 for that gauge and simply barely above the Fed’s 2 p.c purpose. On condition that slowdown, officers have been contemplating when and the way a lot they will lower rates of interest this yr.

Whereas traders 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 might be, cautious about this resolution — as a result of we might 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 customers are nonetheless spending at a speedy clip. Latest hiring knowledge 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 must be in a rush to chop,” Mr. Powell stated. “It means we will wait and change into extra assured that, the truth is, inflation is coming all the way down to 2 p.c on a sustainable foundation.”

The Fed is making an attempt to stability two dangers: On one hand, officers don’t wish to hold 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 totally underneath management.

If excessive inflation lingers for years on finish, it could actually change into embedded within the economic system as folks and corporations alter their habits, making it even tougher to stamp out in the long term.

Buyers at the moment anticipate that the Fed would possibly start decreasing charges in June. Fed officers projected final week that they have been prone to make three quarter-point price cuts earlier than the top of this yr.

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

“If we have been to see sudden weak point within the labor market,” Mr. Powell stated, “then that’s one thing we might be rigorously, and will draw a response as nicely.”

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

“There’s no purpose to suppose 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 threat that the central financial institution could possibly be criticized for reducing borrowing prices within the run-up to the election, since doing so might help markets and the economic system and might 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 in all probability assist the Democrats.” Mr. Trump first elevated Mr. Powell to the position of Fed chair, although he has since been reappointed to the position by President Biden.

The Fed is unbiased of the White Home, and its officers stress that they set coverage with an eye fixed on the economic system, not politics. Mr. Powell reiterated that on Friday.

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