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 a news conference last week, after the Fed announced its first rate cut this year. When the Fed cuts its key rate, it often over time reduces other borrowing costs for things like mortgages, car loans and business loans. When the Fed cut its key rate to about 4.1% last week, policymakers signalled they would likely reduce rates twice more.