WASHINGTON — Chairman Jerome Powell said Thursday that the Federal Reserve will likely cut its key interest rate slowly and deliberately in the coming months, in part because inflation has shown signs of persisting and Fed officials want to see where she goes next.

Powell, speaking in Dallas, said inflation is getting closer to the central bank’s 2% target, “but it’s not there yet.”

At the same time, he added, the economy is strong and policymakers can take the time to monitor inflation.

“The economy is not sending any signals that we need to hurry to lower rates,” the Fed chairman said. “The strength we are currently seeing in the economy gives us the opportunity to approach our decisions with caution. »

Economists expect the Fed to announce another quarter-point rate cut in December, following a quarter-point cut last week and a half-point cut in September.

But what action the Fed will take next is much less clear. In September, central bank officials collectively indicated they planned to cut their key rate four times in 2025. Wall Street traders now expect only two rate cuts, according to futures prices tracked by CME FedWatch. And after Powell’s cautious remarks Thursday, traders put the probability of a Fed rate cut in December at just under 59%, down from 83% a day earlier.

The Fed’s benchmark interest rate tends to influence borrowing rates across the economy, including for mortgages, auto loans and credit cards. But other factors can also push long-term rates higher, including expectations for inflation and economic growth.

For example, Donald Trump’s victory in the presidential election sent yields on Treasury securities soaring. It’s a sign that investors expect faster growth next year, as well as potentially larger budget deficits and even higher inflation if Trump imposes widespread tariffs and mass deportations of migrants as he promised.

In his remarks on Thursday, Powell suggested that inflation could remain slightly above the Fed’s target in the coming months. But he reiterated that inflation should ultimately fall further, “albeit on a path sometimes strewn with pitfalls.”

Under questioning, Powell also explained why he considers the Fed’s role as an independent federal agency to be crucial to its ability to combat inflation. During his first term, Trump threatened to fire Powell for failing to cut interest rates. And during this year’s election campaign, Trump asserted that as president, he should have a “say” on the Fed’s rate policy.

Powell said Thursday that the Fed’s independence from policy concerns has made the public confident that policymakers will keep inflation low over time. This confidence, in turn, helped reduce inflation after its peak following the pandemic. When consumers and businesses expect inflation to slow, they act in ways that help contain it, for example by not demanding steep increases in the cost of living.

“The public,” Powell said, “believed that we would reduce inflation and restore price stability. And that’s ultimately the key.

Powell declined to comment on other policy topics, including the potential impacts of Trump’s proposals to impose drastic tariffs and implement mass expulsions.

Other Fed officials have also recently expressed uncertainty about the extent of the rate cut, given the economy’s steady growth and apparent stickiness in inflation.

As measured by the central bank’s preferred inflation gauge, so-called core prices, which exclude the volatile costs of food and energy, have been stuck in the high 2% range for five months.

On Wednesday, Lorie Logan, president of the Fed’s Dallas branch, said it was unclear how much further the Fed should cut its key short-term rate.

“If we cut too far … inflation could reaccelerate and the (Fed) might have to change direction,” Logan said. “I think it’s best to proceed with caution.”