WASHINGTON (AP) — Chairman Jerome Powell said Thursday that the Federal Reserve will likely cut its key interest rate slowly and deliberately in the coming months, in part because inflation showed signs of persistence and Fed officials want to see where it goes.

Powell, in prepared remarks for a speech in Dallas, said inflation was moving closer to the Fed’s 2 percent target, “but it’s not there yet.”

At the same time, he said, the economy it is strongand Fed policymakers may take time to monitor the path of inflation.

“The economy is not sending any signal that we need to rush to cut rates,” the Fed chairman said. “The strength we’re currently seeing in the economy gives us the ability to approach our decisions carefully.”

Economists expect the Fed to announce another quarter-point rate cut in December after a off a quarter point last week and cutting to half a point in September.

But the Fed’s steps after that are much less clear. In September, central bank officials signaled together that they intended to cut their key interest rate four times in 2025. However, Wall Street traders now expect just two Fed rate cuts, according to futures prices tracked by CME FedWatch.

The Fed’s benchmark interest rate tends to influence borrowing rates throughout the economy, including for mortgages, auto loans and credit cards. Other factors, however, can also push long-term rates higher, particularly expectations of inflation and economic growth.

Donald Trump’s victory in the presidential election sent Treasury yields higher. It’s a sign that investors expect faster growth next year, as well as potentially higher budget deficits and even higher inflation, should Trump impose widespread tariffs and mass deportations of migrants, so as he promised.

In his remarks on Thursday, Powell hinted at that inflation it could remain stuck somewhat above the Fed’s target in the coming months. But he reiterated that eventually inflation should fall further, “albeit on a sometimes bumpy path”.

Other Fed officials have also recently expressed uncertainty about how much they can cut rates, given the steady growth of the economy and the apparent stiffness of inflation.

As measured by the central bank’s preferred inflation gauge, so-called core prices, which exclude volatile food and energy costs, have been stuck in the high 2% range for five months.

On Wednesday, Lorie Logan, president of the Fed’s Dallas branch, said it was unclear how much the Fed should cut the key rate in the short term.

“If we cut too much … inflation could reaccelerate and (the Fed) may have to reverse course,” Logan said. “I think it’s best to proceed with caution.”