The president of the Federal Bank of the United States ( ), Jerome Powell said the financial data of the second quarter provided policy makers with greater confidence that he is heading towards the target of 2% of the central bank, possibly clearing the way for short-term interest rates reductions. Powell stressed the last three inflation measurements, although he made it clear that he did not intend to send any specific message regarding the timeframe for interest rate reductions, according to Bloomberg. It also established the displacement of bluefin tuna in the direction of emphasising the potential risks to the labour market, alongside Fed’s constant focus on price pricing. “We did not gain additional trust in the first quarter, but the three measurements of the second quarter, including this previous week, add some trust,” Powell said yesterday (15.7.2024) during an interview he granted David Rubenstein at the Economic Club of Washington DC. “Now that inflation has decreased and the labour market has indeed cooled down, we will look at both orders,” Powell said. “They are in a much better balance”. The Fed has kept lending costs at the highest level in over two decades, as the central bank has been seeking to reduce inflation to the 2% target. Officials aim to further slow down price growth without causing undue damage to the labour market, which has so far been well sustained against high borrowing costs. More recently, however, the unemployment rate has gradually increased and is now at the highest level since 2021, amid other signs of weakening the wider labour market. These trends, along with improving inflation figures, have strengthened the assumption that the Fed will soon begin to reduce its key policy interest rate. Powell described the labour market as “no longer overheated” compared to earlier in the recovery from Covid-19’s pandemic and stated that “an unexpected weakening” could be a reason for Fed to react.