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If the Fed were to cut rates “too aggressively,� Powell said, “we could leave the inflation job unfinished and need to reverse course later" and raise rates. But if the Fed keeps its rate too high for too long, "the labor market could soften unnecessarily," he added.

Powell's remarks echoed the caution he expressed during , after the Fed announced its first rate cut this year. At that time he said, “it's challenging to know what to do.�

The careful approach he outlined is quite different from that of some other members of the Fed's rate-setting committee, particularly those who were appointed by President Donald Trump, who are pushing for faster cuts. On Monday, Stephen Miran should quickly reduce its rate to as low as 2% to 2.5%, from its current level of about 4.1%. Miran was appointed by Trump this month and , taking his seat just hours before the Fed met last Tuesday. He is also a top adviser in the Trump administration and expects to return to the White House after his term expires in January, though Trump could appoint him to a longer term.

And earlier Tuesday, Fed governor Michelle Bowman also said the central bank should cut more quickly. Bowman, who was appointed by Trump in his first term, said inflation appears to be cooling while the job market is stumbling, a combination that would support lower rates.

When the Fed cuts its key rate, it often over time reduces other borrowing costs for things like mortgages, car loans, and business loans.

“It is time for the (Fed) to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility,� Bowman said in a speech in Asheville, North Carolina. “We are at serious risk of already being behind the curve in addressing deteriorating labor market conditions. Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward.�

Yet Powell's comments showed little sign of such urgency. Other Fed officials have also expressed caution about cutting rates too fast, reflecting deepening divisions on the rate-setting committee.

On Tuesday, Austan Goolsbee, president of the Federal Reserve's Chicago branch, said in an interview on CNBC that the Fed should move slowly given that inflation is above its 2% target.

“With inflation having been over the target for 4 1/2 years in a row, and rising, I think we need to be a little careful with getting overly up-front aggressive," he said.

Last week the Fed cut its key rate for the first time this year to about 4.1%, down from about 4.3%, and policymakers signaled they would likely reduce rates twice more. Fed officials said in a statement that their concerns about slower hiring had risen, though they noted that inflation is still above their 2% target.

In a question and answer session, Powell said that tariffs, so far, have had a fairly limited impact on inflation, though he suggested that could change.

He said U.S. companies are paying most of the tariffs, which contradicts Trump administration claims that overseas companies are shouldering the payments. But he said that the pass-through of tariff costs to consumers “has been later and less than we expected."

He also said the Fed continues to tune out attacks against it and added that the Fed does not consider politics when making its decisions. Powell and the Fed have been under steady attack from Trump, though Powell did not name him.

“Whenever we make decisions, we’re never, ever thinking about political things,� Powell said. “Truth is, mostly people who are calling us political, it’s just a cheap shot. ... We don’t get into back and forth with external people.�