Powell indicates further, smaller rate cuts, insists the Fed is 'not on any preset course'

Federal Reserve Chair Jerome Powell said Monday that the recent half percentage point interest rate cut shouldn't be interpreted as a sign that future moves will be as aggressive, in fact indicating the next moves will be smaller.

The central bank chief asserted during a speech in Nashville, Tennessee, that he and his colleagues will seek to balance bringing down inflation with supporting the labor market and let the data guide future moves.

"Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course," he told the National Association for Business Economics in prepared remarks. "The risks are two-sided, and we will continue to make our decisions meeting by meeting."

Powell did indicate that if the economic data remains consistent, there are likely two more rate cuts coming this year but in smaller, quarter percentage point, increments. That stands in contrast with market expectations for more aggressive easing.

"This is not a committee that feels like it's in a hurry to cut rates quickly," he said during a Q&A period following his speech with Morgan Stanley economist Ellen Zentner. "If the economy performs as expected, that would mean two more rate cuts this year, a total of 50 [basis points] more."

Stocks fell as Powell spoke, with the Dow Jones Industrial Average off more than 150 points. Treasury yields moved higher, with the benchmark 10-year Treasury note most recently yielding close to 3.8%, up nearly 5 basis points on the session.

The remarks come less than two weeks after the rate-setting Federal Open Market Committee approved the half percentage point, or 50 basis points, reduction in the Fed's key overnight borrowing rate.