Central Banks Tread Cautiously Despite Easing Inflation

Investors looking for clear guidance on the path of interest rates received few firm commitments from top central bankers on Tuesday despite the progress seen on inflation. At an event in Portugal, Jerome Powell, chair of the Fed, and Christine Lagarde, president of the European Central Bank ECB, said they were content to watch the incoming data before committing to any decision on interest rates.

With inflation slowly moving towards the target, investors think that there is a good chance that the Fed will start cutting interest rates in September. Powell acknowledged that the risks to the Fed’s inflation and unemployment mandates “have come back much closer to balance,” but he declined to comment on the chances of a September cut. “I am not going to be landing on any specific dates,” he said.

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