GOP Senator Tim Scott Says He Spoke To Jerome Powell And Fed Chair Foresees Inflation Coming Down: 'Prospect Of Rate Cuts...Are Going Up'

Sen. Tim Scott (R-S.C) anticipates a potential decrease in inflation, which could lead to an increase in rate cuts, following a discussion with Federal Reserve Chairman Jay Powell.

What Happened: On Tuesday, Scott mentioned about his recent conversation with the Federal Reserve Chairman Jay Powell during CNBC’s “Squawk Box.” Scott indicated that Powell foresees a decline in inflation, which could subsequently increase the likelihood of rate cuts.

“I had a conversation with Jay Powell yesterday,” he said.

“And one of the things I left with is that he sees inflation coming down. So the prospect of rate cuts – I think – are going up.”

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Scott’s post came in response to Powell’s semiannual testimony before the Senate Banking Committee, where he stated that a policy rate cut would not be “appropriate” until the Fed gains greater confidence that inflation is heading sustainably toward 2%.

Why It Matters: Powell recently reiterated his position that reducing policy restraint too soon or too much could stall or even reverse the progress made on inflation.

Investors are keenly awaiting the June Consumer Price Index (CPI) report this Thursday to strengthen their expectations of interest rate cuts. Market expectations currently place a very high conviction on a September rate cut. Fed futures currently indicate a 71% chance of a rate cut at the Sept. 18 Fed meeting.

Read Next:

• Nasdaq, S&P 500 Futures Rally Ahead Of Powell’s Testimony

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari