Jerome H. Powell, the chair of the Federal Reserve, said on Wednesday that he thought the central bank would begin to lower borrowing costs in 2024 but that policymakers still needed to gain “greater confidence” that inflation was conquered before making a move.

“We believe that our policy rate is likely at its peak for this tightening cycle,” Mr. Powell said during testimony before the House Financial Services Committee. “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”

Mr. Powell’s comments on economic policy were largely in line with what markets have been expecting. Policymakers raised interest rates in 2022 and 2023 to slow growth and bring inflation under control, and they have been signaling for months that they could soon begin to lower those rates as price increases cool. Fed officials have also been clear that they do not want to begin cutting borrowing costs prematurely, and have kept their options open on timing.

But while Mr. Powell said little that was new about the rate outlook, he made significant news on another topic: bank regulation.

In addition to guiding the economy with its interest rate policies, the Fed oversees the nation’s largest banks with an eye on maintaining financial stability. During his testimony on Wednesday, Mr. Powell faced a volley of questions about major bank regulations that the Fed and other regulators proposed last year, called “Basel III Endgame.”

The Fed chair signaled that major changes were coming to the proposed rules, and that it was a “very plausible option” that regulators could reissue them altogether, something that lobbyists representing America’s largest banks have pushed for vociferously.

While much of the big news during the hearing related to bank regulation, investors were watching Mr. Powell’s testimony closely for any hint about what might come next for interest rates. What they received was a continuation of the message that the Fed has been sending for months: Rate cuts are coming, but the Fed wants to be careful in making them.

“What we’ve seen so far is an economy that is growing at a solid pace,” Mr. Powell said, even as inflation comes down sharply. “So those are the conditions we see — they’re very attractive conditions — and we’re trying to use our policies to keep that growth going, and to keep that labor market strong, while also achieving further progress on inflation.”

Fed policymakers raised interest rates rapidly from March 2022 to July 2023, lifting them to a range of 5.25 to 5.5 percent, where they currently sit. That has made mortgages, business loans and other types of borrowing more expensive, helping to tap the brakes on an economy that otherwise retains substantial momentum.

Officials have signaled that they could cut interest rates several times this year, and Wall Street is trying to gauge when those moves might begin.

The Fed next meets on March 19-20, but few investors expect officials to lower interest rates at that gathering. Markets see the Fed’s June meeting as a more likely candidate for the first rate cut, and are betting that central bankers could lower borrowing costs three or four times by the end of the year.

The Fed chair warned against cutting rates too early, noting that “reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy.”

While inflation has come down, it is lingering above the Fed’s 2 percent goal.

The central bank’s preferred inflation measure climbed 2.4 percent on an annual basis in January, which is well below its nearly 7 percent peak. The measure rose by 2.8 percent after stripping out volatile food and fuel prices for a clearer reading of the inflation trend. (A separate but related inflation measure, the Consumer Price Index, reached a higher peak in 2022 and remains slightly more elevated.)

Still, Mr. Powell also acknowledged that there could be risks to waiting too long to lower interest rates, because “reducing policy restraint too late or too little could unduly weaken economic activity and employment.”

So far, the progress in cooling has come even as the job market has remained strong, with solid hiring and joblessness hovering at 3.7 percent, a low level by historical standards.

Fed officials are hopeful that their policy is helping to bring the economy back into balance, so that price increases can return to a normal level. For instance, the number of job openings has come down over the past year, and as companies compete less aggressively for employees, wage growth is cooling. That could leave firms with less impetus to ratchet up prices to cover climbing costs.

Mr. Powell noted that in the labor market, “supply and demand conditions have continued to come into better balance.”

While some lawmakers asked about the labor market and inflation, the Fed chair fielded many questions about the central bank’s hot-button proposal to ramp up bank regulation, the “Basel III Endgame.”

The proposal, which is the American version of an international standard, would make a number of changes to bank oversight that would ultimately increase the amount of capital — a financial buffer — that large banks must maintain.

While regulation is usually an esoteric and not particularly drama-filled issue, banks and their lobbyists have staged a strident campaign against the proposal. The effort even included a TV ad warning, set against a backdrop of somber piano music, that the proposal would cost families, farmers and seniors.

Even within the Fed’s Washington-based board, governors who will have to vote on the proposal have raised questions or voiced outright opposition to the measures, which were championed by Michael Barr, the Fed’s vice chair for supervision, and his fellow bank regulators.

Mr. Powell signaled repeatedly that changes were coming to the proposal.

“We do hear the concerns, and I do expect that there will be broad and material changes to the proposal,” Mr. Powell said, saying that the final product would have “broad support” within the Fed and in the broader world.

He said that the Fed had not “made that decision” to re-propose the bank reform, but that it was a “very plausible option.”

That was big news: Banks have been pushing the central bank to pull back the proposal and put out a new version. A re-proposal would be a victory for the industry, though it would also probably push the timeline for finalizing the rules — which are politically fraught — into the 2024 election season.

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