Jerome H. Powell, the chair of the Federal Reserve, mentioned on Friday that resilient financial progress is giving the central financial institution the flexibleness to be affected person earlier than chopping 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 basically 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 beneath 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 under its 7.1 p.c peak in 2022 for that gauge and simply barely above the Fed’s 2 p.c purpose. Provided that slowdown, officers have been contemplating when and the way a lot they’ll lower rates of interest this 12 months.

Whereas traders have been initially hopeful that charge cuts would come early within the 12 months and be substantial, Fed officers have lately struck a cautious tone, sustaining that they need higher confidence that inflation was beneath management. Mr. Powell reiterated that message on Friday.

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

Friday’s Private Consumption Expenditures report confirmed that buyers are nonetheless spending at a speedy clip. Latest hiring information has additionally remained stable. 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 mentioned. “It means we will wait and grow to be extra assured that, in truth, inflation is coming all the way down to 2 p.c on a sustainable foundation.”

The Fed is attempting to stability two dangers: On one hand, officers don’t need to hold rates of interest too excessive for too lengthy, risking an pointless recession. On the opposite, they don’t need to lower rates of interest too early, earlier than inflation is totally beneath management.

If excessive inflation lingers for years on finish, it could possibly grow to be embedded within the economic system as individuals and firms regulate their conduct, making it even tougher to stamp out in the long term.

Buyers at present anticipate that the Fed may start decreasing charges in June. Fed officers projected final week that they have been more likely to make three quarter-point charge cuts earlier than the top of this 12 months.

Whereas the economic system appears sturdy for now, Mr. Powell steered that if the job market started to indicate indicators of cracking, the Fed may react.

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

The Fed chair mentioned that whereas there’s all the time an opportunity of a recession, he didn’t suppose that the danger was excessive in the intervening time.

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

“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 might be criticized for chopping borrowing prices within the run-up to the election, since doing so will 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 mentioned 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 pieces,” Mr. Powell mentioned. “We’re working to serve all Individuals, not any specific set of Individuals or political events or leaders.”