Jerome Powell concluded his visit to Capitol Hill as part of his twice-yearly report on the state of the economy this week.

Powell said the risks to the economy have become better balanced, allowing him to broaden his focus beyond getting inflation down. He’s watching carefully for signs of weakness both in the job market and in the broader economy, the central bank chief said.

Federal Reserve Chair Jerome Powell is watching for signs of continued slowing in inflation to guide his next decision on interest rates, but he is also ready to respond to a faster-than-expected deterioration in the U.S. labor market.

“We had quite a lot of good inflation data in the last seven months of last year,” Powell said on Tuesday. “Then we had a bump in inflation in the first quarter, and now we’ve had one good and one very good inflation reading. We need more good data so that we can be confident that what we’re seeing is really that inflation is going back down toward 2%.”

The Federal Reserve doesn’t need to see inflation return to its 2% annual target to consider lowering interest rates. Waiting that long would risk pushing the economy into a recession.

Powell said that the Fed is committed to returning inflation to a 2% annual rate. But it could be ready to cut interest rates sooner—once officials are sufficiently confident that inflation will go back to the target level.

As of right now the market expert predicts a rate cut in September 2024.