Federal Reserve Chair Jay Powell said the central bank does not need to be "in a hurry" to lower interest rates due to the economy’s strength, and that the Fed would be "watching carefully" to make sure certain inflation measures stay within an acceptance range.

“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in prepared remarks for a speech in Dallas.

“The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

Last week, the Fed cut rates by a quarter percentage point, its second reduction in seven weeks.

Ultimately, Powell reiterated the path of the Fed's policy rate will depend on how the incoming data and the economic outlook evolve.

Inflation, he said, is running closer to the Fed’s 2% goal but isn’t there yet. He said the Fed will be paying close attention to core measures of goods and services inflation, excluding housing, which have fallen over the past two years.

"We expect that these rates will continue to fluctuate in their recent ranges,” he said. “We are watching carefully to be sure that they do."

The path down to the Fed’s goal of 2%, he added, will be “sometimes bumpy.”

October inflation readings out this week have shown little progress toward that target, putting into question how deeply the Fed will cut interest rates in 2025.

On Wednesday, the "core" Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, showed prices increased 3.3% for the third consecutive month during October.

Then, on Thursday, the "core" Producer Price Index (PPI) revealed prices increased by 3.1% in October, up from 2.8% the month prior and above economist expectations for a 3% increase.

Powell estimated that based on the CPI and other data released this week that the Fed’s preferred gauge of inflation — core Personal Consumption Expenditures (PCE) Index — rose 2.8% for the month of October. That would mark a tick up from 2.7% in September and August.

Economists, however, don't see the data changing the Fed's outlook for a 25 basis point cut come December. And markets agree, with the CME FedWatch Tool currently placing a nearly 80% chance the Fed cuts rates by 25 basis points at its December meeting.

But the lack of recent progress on the inflation front could prompt the Fed to adjust its Summary of Economic Projections (SEP), which had forecast the central bank would cut interest rates four times, or by one percentage point in total, throughout 2025.