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Fed Chairman Jerome Powell said Thursday that interest rates are still expected to fall further but suggested they may not be this low in the next few months.

Powell said more rate cuts could be on the way because current trends and dynamics of the economy are expected to remain the same, at least in the short term. This includes a slowing labor market and cooling inflation, facilitated by rates that remain at restrictive high levels. Keeping borrowing costs at the current high rate could increase unemployment.

“We are moving policy to a more neutral environment over time,” Powell said in a speech prepared for an event in Dallas. “The economy is not sending any signals that we should rush to lower interest rates.”

While the Fed tries to continue its interest rate reduction cycle, recommended policies President-elect Donald Trump’s decision could eventually bring some dramatic changes to the US economy, which will inevitably affect the Fed’s thinking on interest rates.

Economists mostly agree that it will take time for Trump’s proposed policies to have an impact on the broader economy. If they are effective, the economy may not change dramatically next year. Trump’s economic agenda includes extending the 2017 tax cuts, implementing a series of tax cuts, capping credit card interest rates around 10%, and enacting generally higher tariffs; These plans will likely be guided by the new Republican-led government. Congress.

Although October inflation data does not show any progress compared to the previous month, it does not reflect a real recovery in price pressures. It is also too early for Fed officials to conclude that the October data is indicative of a new trend.

Consumer Price Index increased by 2.6% in October compared to the previous year; This increase from the annual 2.4% level in September is as follows: First year-over-year acceleration since March. The October CPI gained strength, mostly due to comparisons with data from a year ago, when inflation fell sharply, known as the “base effect”. October Producer Price Index was announced on Thursday. also came hot.

These numbers give a glimpse of what the Personal Consumption Expenditures price index, the Fed’s preferred measure of inflation, might show for October, when it is released later this month.

Earlier in the year, it took three consecutive months of bad inflation reports for officials to acknowledge “no further progress”. This forced authorities to keep interest rates steady until September.

Despite some bumps in the road, inflation is expected to continue its steady downward trend for now, according to economists and Powell.

“With labor market conditions in rough balance and inflation expectations well stabilized, I expect inflation to continue falling toward our 2 percent target, albeit on a sometimes bumpy path,” Powell said.

Inflation is no longer on the agenda as much as it used to be. While additional hot inflation reports could influence the Fed’s decisions, officials are also watching the U.S. labor market closely. The slowdown in hiring and the increase in unemployment played a role in the Fed’s start to cut interest rates in September.

Trump’s election to a second term will have major consequences for the Fed as well as Powell.

Economists note that Trump’s agenda risks a resurgence of inflation, which could force the Fed to not only lower interest rates but perhaps start raising rates again if price increases begin to pick up; But the ultimate effects of Trump’s economic plans may not be that high. is evident until later.

This would keep borrowing costs at restrictively high levels; This means that credit card and mortgage costs will continue to put tight pressure on U.S. consumers; If Trump’s plans really add fuel to this fire, they too will be dealing with high inflation.

There is also tension between Trump and Powell, whom the president-elect first nominated in 2017 to lead the central bank. Powell’s commitment to the Fed’s independence has drawn Trump’s ire because the Fed chief ensures that the central bank’s decisions are guided by economic data, not the wishes of any sitting president.

This story is developing and will be updated.