Jerome H. Powell, the chair of the Federal Reserve, underscored Monday that officials are likely to lower interest rates in the coming months as the job market slows and inflation cools “significantly.”

Fed officials lowered interest rates by half a percentage point at their meeting Sept. 18, the first reduction in more than four years. Policymakers usually lower borrowing costs in quarter-point increments, so that was an unusually large decrease.

The move came as the Fed made notable progress in its fight against rapid inflation. Price increases have slowed substantially since their 2022 peak, which meant that the high interest rates the Fed had maintained since mid-2023 were no longer seen as necessary.

“Inflation has moved down, and unemployment has moved up, in both cases significantly,” Powell explained Monday, in the text of a speech prepared for delivery at a meeting of business economists in Nashville, Tennessee. “It was time for a recalibration of our policy stance to reflect progress toward our goals as well as the changed balance of risks.”

The question now is how quickly central bankers will ease off in the months ahead. Rates remain at around 4.8%, which is much higher than the level most economists think is necessary to keep the economy growing steady over time. That level is sometimes referred to as a “neutral rate” or a “neutral policy stance.”

“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance,” Powell said. “But we are not on any preset course.”

Powell’s measured approach is a nod toward the two big risks facing the Fed.

High interest rates slow the economy by making it more expensive to borrow to buy a home, finance a car purchase, or expand a business. By lowering interest rates, the Fed is essentially taking their foot off the economic brakes.

But figuring out how quickly to do that is an inexact science. On one hand, officials do not want to lower interest rates so quickly that they cause the economy to sharply accelerate, fueling a burst in demand that could keep inflation too hot for comfort. On the other, they do not want to reduce interest rates too slowly, causing the job market to slow so much that unemployment jumps sharply and there is a risk of an outright recession.

The goal is to carve a middle path, often called a “soft landing,” in which Fed policy slows the economy enough to wrestle inflation fully under control without causing a painful downturn.

Already, the unemployment rate has climbed notably over the past year. And inflation has slowed to just a bit above the Fed’s official target of 2% (although a core measure, which strips out food and fuel costs for a sense of the underlying trend, remains more elevated).

The Fed’s decision to start their rate cuts with a big reduction at their September meeting “reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate economic growth and inflation moving sustainably down to 2%,” Powell reiterated Monday.

Investors are trying to figure out whether the Fed is likely to make a large rate cut at their next meeting, Nov. 6-7. As of early Monday afternoon, markets saw roughly equal odds of either a normal or a big reduction at that meeting.

But Fed officials may avoid committing clearly until they are closer to that date, and have more data in hand. Policymakers will receive key economic data between now and then, including a jobs report on Friday that should offer insight into how well the labor market is holding up.

“We will continue to make our decisions meeting by meeting,” Powell said.