Federal Reserve Chairman Jerome Powell on Tuesday expressed satisfaction with the progress made over the past year in tackling inflation, but stressed that more confidence was needed before considering a rate cut.

«We’ve made quite a bit of progress in getting inflation back to our objective,» Powell told a central bank forum in Sintra, Portugal. «The latest inflation readings, and to a lesser extent the previous one, suggest that we’re returning to a disinflationary path. We want to be more confident that inflation is moving sustainably toward 2% before we begin the process of reducing or easing policy.»

Powell spoke alongside European Central Bank (ECB) President Christine Lagarde and Brazilian central bank governor Roberto Campos Neto at an event hosted by the ECB and moderated by CNBC’s Sara Eisen.

Powell’s comments come as markets are closely watching the actions of the Fed and its global counterparts, as inflation shows signs of slowing and some central banks, including the ECB, have begun slowly cutting interest rates.

The Commerce Department’s personal consumption expenditures price index, which the Fed uses as its main gauge of inflation, rose to a 12-month pace of 2.6% in May. That level has steadily declined after hovering around 4% a year ago, although policymakers don’t expect it to hit the Fed’s 2% target until 2026.

While acknowledging the progress made in fighting inflation, Powell warned against the risk of acting prematurely, as this could jeopardize the downward trend in price increases, which just two years ago reached the fastest pace since the early 1980s.

«We are well aware that if we go too soon, we can undo the good work we have done,» he said. «If we go too late, we could unnecessarily weaken the recovery and expansion.»

The risks of acting too late versus too early have been better balanced this year as inflation has moderated and the economy and labor market have remained strong, Powell added. In contrast, the Fed spent much of last year worried that cutting rates too early and allowing inflation to resume its upward run was the greater risk.

At the start of this year, markets were expecting at least six Fed rate cuts of a quarter of a percentage point each. Since then, market expectations have shifted to two cuts, one in September and another before the end of the year. However, members of the Federal Open Market Committee have only forecast one cut at their June meeting.

Asked if he thought the Fed would cut rates in September, Powell said, «I’m not going to give specific dates today.»

He was also asked if he was worried about the political climate, particularly if Donald Trump, a fierce critic of Powell, wins the presidential election in November. «I don’t focus on that at all, and it’s not just a talking point. I really think we’re going to continue to do our job,» he said.