United States Federal Reserve Board Chairman Jerome Powell emphasized on Thursday, during his speech before the House Financial Services Committee, that the central bank acknowledges the potential consequences of delaying interest rate cuts.

“Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2 percent. At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell explained in prepared remarks.

He reiterated that if the economy progresses as anticipated, the bank will consider “carefully removing” the restrictive policy stance in the upcoming year. “We need to give businesses the power to set prices freely,” he added.

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